back to article $533 MEEELLION – the cost of Apple’s iTunes patent infringement

Apple has been ordered to pay nearly half a billion dollars to Texas-based patent licensing company Smartflash after a jury found that Cupertino's iTunes music service had violated three patents. Late on Tuesday, a jury at the U.S. District Court for the Eastern District of Texas – when asked if Smartflash had proved "by clear …

  1. Gray
    Trollface

    If there is to be any hope ...

    Apple has the cash reserves to force a fix for the broken US patent system.

    1. Dazed and Confused

      Re: If there is to be any hope ...

      Except that Apple it one of the biggest abusers of the US Patent system, so they are hardly likely to want to see a meaningful fix are they.

      Do I see slide to unlock being mentioned? Hardly an innovation, the builders of Stone Henge knew that one.

      Do I see things that go bounce? well that just happens naturally.

    2. Mikel

      Re: If there is to be any hope ...

      Apple now has enough cash on hand to buy both Intel and AMD.

      1. dogged

        Re: If there is to be any hope ...

        Only if they happened to be for sale.

        1. Dazed and Confused

          Re: Only if they happened to be for sale.

          Aren't they listed on the stock market?

          That means they are permanently up for sale to anyone with the readies.

          1. Graham Lee

            Re: Only if they happened to be for sale.

            Well, a bit of them is. According to http://www.intc.com/intel-annual-report/2013/10K/22-issuer-purchases-of-equity-securities.html Intel was buying back a lot of Intel in 2013, so there's less of Intel for sale.

            1. Dazed and Confused

              Re: Only if they happened to be for sale.

              If Intel are buying up Intel stock then it still means that 100% of Intel is up for sale, it just means that there are less shares out there that you need to collect to make a full house.

      2. Sorry that handle is already taken. Silver badge

        Re: If there is to be any hope ...

        Apple now has enough cash on hand to buy both Intel and AMD.

        At their current prices, perhaps, but to a certain extent the value of a stock reflects the demand for it. If, hypothetically, Apple were to announce (whether explicitly or implicitly) an intention to buy 100% of both Intel and AMD, you'd see an immediate and quite healthy jump in the price of both companies.

    3. Mpeler
      Trollface

      Re: If there is to be any hope ...

      All of these patent trolls, who did ABSOLUTELY NOTHING to develop the

      "intellectual property" they are so "carefully" protecting, can just FOAD.

      Same with the financial/investment company locusts who swoop in and

      "rescue" troubled companies.

      I've got a little list, I've got a little list.

      Would be interesting to see "The Mikado" play out in the technology world.......

  2. Anonymous Coward
    Anonymous Coward

    Gotta love Apple.

    "According to a report in Reuters, Apple suggested the outcome was another reason for reform of the patent system, which would curb litigation by companies that do not make products themselves, such as Smartflash."

    So OK to patent slide to lock, but not to design a complete CPU architecture (ARM)?

    1. 45RPM

      Re: Gotta love Apple.

      It's a bit different, isn't it? Patent trolls buy up, and patent, ideas without producing any product (say, purple oranges would be neat. Quick! Patent it. No, there's no need to actually produce one. We'll just say that we have). ARM produces a lot of software, and an entire, tested, CPU design (which it then licenses). I'd say that that was a tangible product. And, don't forget, ARM has produced chips - and entire computers - in the past. Acorn RISC Machine.

      1. JetSetJim Silver badge

        Re: Gotta love Apple.

        Hmm - well, SmartFlash are the original assignee of the patent, but I have to wonder that the filing date of the first patent in the US is 2006, but the priority date is 1999 (so it was filed elsewhere in 1999 and there is still the possibility that SmartFlash bought it and subsequently filed in patent-friendly US of A.

        The first one is somewhat trivial, but in the context of 1999 it may well have been novel. It covers a data store somewhere on the internet, that has a database of permissions and payment credentials for users and the data itself. When a device requests some data, it can check permission, get payment if necessary, and then serve the data to the device. So basically the iTunes store.

        The second one reads almost exactly the same. The third TLDR, but looks like more of the same.

        For the time, the patents may well have been novel (bit they're still "a shop on an internet", so a bit ridiculous), although there's at least Ritmoteca to contend with as this was established in 1998.

      2. Anonymous Coward
        Stop

        Re: Gotta love Apple.

        Ok lets flip this (being devils advocate here)

        I am Mr Fred Smith, I have a designed Cold Fusion system. It will cost £1 million to make the 1st one. Being sensible, I've set a patent in place.

        Now Pear Industries are sniffing around and start to copy my idea. They have £1 billion in the bank and an army of lawyers.

        They are offering me £50 for the patent.

        Patent Trolls Inc are offering me £100 million for the patent so they can profit from licensing it onwards. They also have a huge cash flow and a team if lawyers.

        Do I

        a) try and fight Pear industries, knowing it will bankrupt me and I'll end up with nothing.

        b) Sell to Patent trolls inc?

        Why should I lose out?

        I believe it should be reformed, but it's not as black and white as Apple make out (and don't think it's for our benefit). Be careful what you wish for,

        The much "hated" MPEG-LA are a perfect example. They make NOTHING, but the dozens of companies it licenses on behalf of certainly do and invest a huge a lot of money in the technologies,

        Just be careful what you wish for.

        1. Alien8n Silver badge
          Alien

          Re: Gotta love Apple.

          Unfortunately for Mr Fred Smith (or fortunately depending on how you view it) the way the patent system is *supposed* to work his patent would be invalid as he is unable to produce a working model. First to production should be the rule and the reason most patents are ruled invalid is due to prior art. Not always the case, famously Alexander Graham Bell is credited with inventing the telephone, despite Elisha Gray actually inventing it first. Credit goes to AGB though as he was first to provide a working model to the patent office. The way the patent system has been broken is in enabling the patenting of "ideas" which are then worded in such a wooly way that they cover entire areas that were never intended in the first place.

          So in the case of iTunes if the patent system was working properly it should rule in their favour for this simple fact that the holders of the patent cannot show a functional product created before iTunes and that there is also prior art to show that their patent is not a new and novel invention.

          1. The Mole

            Re: Gotta love Apple.

            What do you mean by a model? Is a computer model/mathematic proof sufficient? After-all why should Mr Smith loose out because he can't afford to manufacture his new jet engine? Without a patent he can't safely go and ask someone else with the skills and equipment to manufacture it as they could just steal the idea and will have the resources to make it quicker.

            I totally agree though that the system is broken, mathematical techniques and processes shouldn't be patentable (covering most of software - that can be copyrighted), the tests for innovative, technical effect and non-obvious to someone skilled in the art should actually be enforced. Taking X and shoving it on the internet or on a mobile phone is not generally innovative or non-obvious. Thinks like bouncing menus don't have technical effects and are just processes/mathematical techniques anyway.

            1. Alien8n Silver badge

              Re: Gotta love Apple.

              @TheMole This is exactly how patents were designed to work. If you don't have a working model or process, demonstrable and deliverable to the patent office you can't patent it. I'm not saying it's fair, only that it's how it's supposed to work. In the form of code it's deliverable, but the idea of "swiping to unlock a phone" should not be patentable. The code behind it should be, but not the idea. It's how many patents work in real life as well, you can have 2 items that look identical and work the same way, but built differently so 2 separate patents. Neither infringes the other's patent but to a layperson they may seem to do so as they appear to be the same.

              To take your example again and with what I said previously Elisha Gray was unable to patent his telephone as an idea, he had to have a working model, a device that physically existed. As Alexander Graham Bell beat him to the patent office he lost out. That's the fact of innovation, if you have a great idea and can't build it, or persuade someone else to build it for you, someone else will beat you to it. Doesn't matter if you had your idea 20 years previously or 20 minutes previously, the one who gets their model into the patent office first wins.

              1. Eddy Ito Silver badge

                Re: Gotta love Apple.

                Gray wasn't able to patent his telephone because he filed a patent caveat which is something that might now be called a provisional patent where Bell filed a full patent application on the same day. Also, there is no evidence that Gray didn't have functional prototypes that worked but there is suspicion that Bell had contacts in the patent office who cheated a bit. In any case you aren't required to have a working model you only need to show that your described implementation can be created and would work.

                It's very rare when you actually need a working model since for most things the process of making it is clearly within current technology. You can't patent a flying carpet unless you can show that you can actually build one and that it works how you say since magic isn't a valid technology. Notice that being able to show one can be built is different from having a working model. Now if flying carpets were a new idea and you could feasibly build one then you could likely get a patent on flying carpets. Unfortunately flying carpets aren't a new idea so the best you could do is patent your implementation of a flying carpet and if someone else comes along who can work out a feasible implementation that doesn't use your technology then they are free to patent their own implementation of a flying carpet.

                What makes the slide to unlock patent rubbish is locks are known, sliding locks are known and there is nothing unique about the process or the implementation. Go ahead and copyright the code but it's just an "idea" with no novelty in it whatsoever.

                1. Alien8n Silver badge

                  Re: Gotta love Apple.

                  @Eddy While true that patent law was amended to require just the description of how the invention worked it was originally required to provide a working model. By the time of the invention of the telephone this had been changed. (Working models were required from 1790 to 1793).

                  The main problem with patents since they were first around is still one of money. Most people simply cannot afford to file a patent, so we're still down to the fact that Joe Public can have the best idea on the planet but will never see their idea make him rich unless he can find the money to patent it. And certainly in the early days there were plenty of clerks willing to not only "lose" patents for money but also to steal them wholesale on behalf of unscrupulous businesses.

                  1. Eddy Ito Silver badge

                    Re: Gotta love Apple.

                    @ Alien8n, I've got to agree with you there. I'll even go so far as to say there's probably no lack of shady individuals who would be more than happy to "help" the little guy with his patent while shuffling the key bits of it through a back channel network to folks willing to pay top dollar and who can file it in an hour while the little guy is being "helped" for two months at the low, low price of five or ten grand.

                    I don't even want to get started on how much corporate IP policy hinders all sorts of creativity between signing over IP rights to anything and everything. My first employer was so bad even the receptionist had to sign the contract which I later thought was ridiculous. The only excuse I had was that I started as an intern and was honored when they asked to sign me on before I had graduated college but I'm glad I didn't make that mistake twice.

        2. Frank Marsh

          Re: Gotta love Apple.

          You make an excellent point, one that patent apologists believe is the only point. The problem exist when the "inventor" hasn't invented anything but instead has simply described the problem. When a company like Apple comes along with the solution, the inventor (or, more likely, his chosen troll) comes along and extracts money from Apple.

          The patent system establishes a quid pro quo: a 20-year monopoly in exchange for public disclosure. When the value of an inventor's disclosure is nearly zero, the patent monopoly shouldn't reward the inventor with millions, and hundreds of millions of dollars.

    2. DougS Silver badge

      Re: Gotta love Apple.

      What does ARM have to do with anything? Apple licenses the ARM architecture, and designs their own CPUs that use that architecture. They don't use the ARM designed cores like A57 etc. and thus pay a different royalty structure than companies that do.

      People should learn a little history: Apple was one of the FOUNDERS of ARM (the company that exists today, not the company that built Acorn computers that today's ARM was spun off from) Without their involvement, there would be no ARM architecture today, it would be a footnote in the computing history of the 80s.

      1. druck Silver badge

        Re: Gotta love Apple.

        Apple put in some cash, all the smarts in ARM came from Acorn and VLSI.

      2. Anonymous Coward
        Anonymous Coward

        Re: Gotta love Apple.

        You seem to have got Microsoft & Apple mixed up with Apple & ARM, but I cannot understand how. ARM was always going to survive due to their hardware being vastly superior.

        1. DougS Silver badge

          Re: Gotta love Apple.

          No, they weren't. Without Apple funding the development of ARMv6, and then buying a bunch for the Newton, it wouldn't be around today. Your claim of 'vastly superior' is neither here nor there. The tech world is littered with superior technology that market forces dictated would lose to inferior technology. Or do you think that x86 was the best CPU architecture, DOS was the best operating system and IDE was the best interface standard for hard drives?

          1. Ribblethrop

            Re: Gotta love Apple.

            NObody makes that claim about x86, because it is from the 70s, Intels chip development was ludicrously slow, but like MS, they dictated what eveyone used. It became impossible for ARM machines to be manufactured due to this. Hopefully the decades of waste due to the US computer biz is mostly over. Oh wait! Thanks Apple.

  3. Jagged

    schadenfreude

    nuff said

  4. 45RPM

    So a patent troll is trolling and it's Apple that's been naughty? Seriously? Would this headline have been worded in this manner about Google? Microsoft? Amazon? Samsung?

    I mean, I get that people hate Apple (although I don't understand why, anymore than I understand hatred of the other above named companies), but to the extent that the troll is given some degree of sympathy. Isn't that taking it a bit far?

    1. Jagged

      @45RPM

      Personally I have no sympathy for patent trolls and the cynic in me sees no good outcome from this case. But I can't help but be amused when the shiny white Kettle gets reminded its a kitchen appliance!

    2. wayward4now

      "I mean, I get that people hate Apple (although I don't understand why, anymore than I understand hatred of the other above named companies)"

      It's dead simple, Apple screws over their customer base with very expensive kit that is obsoleted a year or two later. Then you have to fork over for the next new shiny or be kicked to the curb. I knew one guy who talked his father into buying a Lisa for their business. His father insisted that, after it proved to be as useful as a brick, it be displayed on top of a filing cabinet to remind Junior to not squander a LOT of the office cash on the next shiny thing. And, there it sat. Just the hard drive in it was almost 10 grand. They kicked us original Apple][ owners to the curb after we put the money into their fledgling company at the start. The Woz didn't do this. Jobs did. My 1978 $2,000 investment in my Apple][ was a total waste. So, if you don't know the history, you are condemned to repeat it.

  5. Greg D

    annoyingly, I have to side with Apple.

    I feel dirty now.

    1. Anthony 13
      Coat

      Re: annoyingly, I have to side with Apple.

      Argghhh, I originally read that as 'slide' with Apple - that would have been a good one!

  6. ForthIsNotDead

    Why not just buy Smartflash...

    ...and then fire everyone? Just to make a point.

    1. 45RPM

      Re: Why not just buy Smartflash...

      @ForthIsNotDead

      Because the Patrick Racz would make a fat packet and it would encourage him to keep on trolling. You know the thing about not giving in to a terrorists demands? That.

    2. paulf Silver badge
      Black Helicopters

      Re: Why not just buy Smartflash...

      "...and then fire shoot everyone? Just to make a point."

      Fixed it for you.

      Can anyone else hear helicopters...

  7. John H Woods

    What is this?

    "three patents related to iTunes, specifically regarding the accessing and storing downloaded songs, videos and games"

    I'm guessing that's the patent on storing them somewhere and accessing them somehow?

    1. JonP
      Trollface

      Re: What is this?

      I'm guessing that's the patent on storing them somewhere and accessing them somehow?

      ... "on a mobile device" ...

  8. Anonymous Coward
    Anonymous Coward

    Apple is part of the problem. However, the case demonstrates how bad the situation has gotten. Reforms to the system are need.

  9. ratfox Silver badge
    Stop

    U.S. District Court for the Eastern District of Texas

    Stopped reading right there.

    1. gerdesj Silver badge

      "Stopped reading right there."

      Ahh ... Slashdot commentard 8)

  10. Tom 7 Silver badge

    Dont be Apple.

    Remember Snow White.

  11. David Austin

    Why Texas?

    Why does most Patent Casework happen in Texas? Is there some quirk in their state law, or did the Ecosystem just snowball from a few favourable judgements? Never seen it explained why Texas became patent capital of the US.

    1. Dave 126 Silver badge

      Re: Why Texas?

      http://www.technologyreview.com/news/405259/a-haven-for-patent-pirates/?PM=GO

      1. frank ly

        Re: Why Texas?

        It's interesting that the linked article mentions a case where a Japanese plaintiff was sueing a Taiwanese company ..... in a court in Texas.

    2. Anonymous Coward
      Anonymous Coward

      Re: Why Texas?

      Why Texas ?

      1 ) because it's a liberal minded and progressive state that just so happens to have executed more people since 1976 than the rest of USA put together.

      2) The home of Bush.

      3) The average IQ in Texas is 54

      1. Hans 1 Silver badge

        Re: Why Texas?

        @ Mine's a Guinness

        > 3) The average IQ in Texas is 54

        3) The average IQ in Texas is 5.4

        Fixed it.

  12. ~mico
    Trollface

    Instant Karma

    Payback time, lol. For all the corners Apple rounded.

    1. John Brown (no body) Silver badge

      Re: Instant Karma

      Yes, cutting corners almost always leads to tears.

    2. gnasher729 Silver badge

      Re: Instant Karma

      "For all the corners Apple rounded"

      I suppose the jury was as knowledgable as you. "Rounded corners" was one tiny component of a design patent. Design patent, not utility patent. One tiny component, and you had to copy the whole of the design patent to be infringing (which Samsung did with its iPhone 3 copies).

      On the other hand, anyone is free to have as many rounded corners on their phones or tablets as they wish. As long as they don't copy _all_ the parts of Apple's design patent. Or _all_ the parts of one of Samsung's many design patents. You didn't know that Samsung has design patents on phones with rounded corners, did you?

      On the other hand, maybe I should patent the use of "rounded corners" in a discussion about patents as a clueless troll detector.

      1. Anonymous Coward
        Anonymous Coward

        Re: Instant Karma

        > (which Samsung did with its iPhone 3 copies)

        Oh you mean the cases where Apple's legal thugs photoshopped a picture of a Galaxy until it looked like an iThing and then sued.

      2. ~mico
        Holmes

        @gnasher729 Re: Instant Karma

        Obviously, I am using (and will continue using) "rounded corners" as an euphemism for all attempts to patent something painfully obvious, and then use it to prevent healthy competition. It is, indeed, a way of "cutting corners" in business, litigating instead of out-competing by creating a better product.

        For the record, Samsung phones never looked anything like iPhones: square buttons, clearly visible Samsung logo, and, above all, usability and utility.

  13. Alan Denman

    If it moves patent it, if it don't move patent it.

    I'm now half expecting the worlds cloud and music services not to become the slave minions of the US of arsy patents.

    Software engineering is becoming more and more problemtaic in the US

  14. Velv Silver badge
    Flame

    Nothing wrong with Patent Trolls...

    So what's wrong with someone buying the rights to some intellectual property and then licensing that in the future? The "inventor" gets cash now, and the "investor" risks money on that idea being useful and sellable in the future. Standard investment model.

    OK, now you're fuming, here's the problem. All sorts of shit is being granted a patent, and the detail of patents is so loose that they are being applied to scenarios that the original inventor never even thought of.

    So yes, the patent system needs overhauled. But don't blame the players, blame the game.

    1. Frank Marsh

      Re: Nothing wrong with Patent Trolls...

      Blame the lawyers. We're the only ones who truly understand how broken the system is. But most of us are so blinded by self-interest, we don't do anything about it. So Apple lost, next time they may win, but either way, the lawyers make millions. On *each case*. It's astounding.

    2. Tom 7 Silver badge

      Re: Nothing wrong with Patent Trolls...

      But don't blame the players, blame the game.

      Er in the US the players write the rules of the game.

  15. kmac499

    Now how to pay up..

    Dear SmartFlash;

    OK we'll pay up,

    Your money is in a vault in Ireland in One Euro Coins.

    Enjoy Tim

  16. Eponymous Cowherd
    Thumb Up

    Live by the sword,....

    die by the sword.

  17. bex

    On another foot

    Apple have serous cheek dissing the (admittingly broken) patent system when the enforce their patents that have serious prior art

  18. DesktopGuy

    Im against NPEs suing with impunity, but what about inventors

    Not a fan of trolls or NPEs, but if I was a small time inventor, I would certainly be want to be able to sell the patentable ideas of my invention if I did not have time, resources or inclination to actually build a product myself.

    The question becomes is a patent more valuable to an NPE as something that can be incorporated into a product or as a weapon to fire off against any company with cash.

    As it stands NPEs have everything to gain but virtually nothing to lose by going to court.

    Maybe stop court actions from patents not incorporated into products. Also improve discovery so companies can find out what patents they could potentially fall foul of during product development.

  19. Handy Plough

    First item on the patent reform agenda; make all patent cases federal since they are a federal filing. Take it away from the state courts (esp. the feckin' ejits in Texas).

  20. Mr_Bungle

    Apple said it intended to appeal and called for patent reform

    Is 'ironic' even listed in American dictionary's?

    When they appeal, lets hope they get smashed for another half billion!

    1. dogged
      Headmaster

      Re: Apple said it intended to appeal and called for patent reform

      Dictionaries

      Buy one.

      1. Mr_Bungle

        Re: Apple said it intended to appeal and called for patent reform

        Oh no, my spelling corrected by a pedant.

        Blow me.

  21. Anonymous Coward
    Anonymous Coward

    Hypocrites and fools

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

    Well if the ideas took your guys years, then they probably took the patent inventor years too. And now that inventor and/or his financer are getting a reward for doing it first.

    So shut up, Apple.

  22. arober11

    Time to contest the patent

    This case is going to roll on for many, many, many years. Guessing the next step will be for Apple to contest the patents, as the Supreme court gave some sufficiently vague guidance last Autumn, as to what can not be covered by a patent, as to open the field for many, many, many patents to be contested by many, many, many lawyers.

    See: https://en.wikipedia.org/wiki/Alice_Corp._v._CLS_Bank_International

  23. Amorous Cowherder
    Facepalm

    "Apple complained that the outcome of the case was another reason for reform of the patent system..."

    Oh I see, the system is fine while Apple were fleecing everyone through this "broken" system but not OK as soon as the boot is on the other foot?

  24. Panicnow

    Corporate capture

    You try producing something that doesn't infringe big patent pool companies like Apple!

    Watch Apple sue you to STOP you producing something

    F**KIng hypocrites

    Intelenctual property is THEFT!

    Ip is a privilege, not a right

  25. W. Anderson

    crocadile tears

    Companies like Apple only consider, or say they consider steps to "fix" the broken software patent system in USA, only now that they have been the victim. Up to this point Apple, IBM, Microsoft and othes were quite happy and driven to support "RockStar" Patent Trolling company that they established in attempt to extort tens of billions of $$$dollars from Google or stop Google dead in it's tracks.

    Such supposed chane of heart and/or bigoted position should make most technology users cringe in their skins.

    Unless and until "software" patents are eliminated or vastly restricted, the USA will suffer significantly due to penalty of these ridiculous patents on small inovative entities not being able to compete with the oppressive behemoths. Apple is now reaping what it has sewn.

  26. ecofeco Silver badge

    $533 million?

    So in ten years, after appeals and delays, the plaintiff might collect, what, maybe $100 million? Made in payment over another 10 years. While appealing and delaying some more?

    Rhetorical questions.

    As for patent trolls, Velve has it right. Patent holding groups are often the ONLY way an inventor can make money, Most independent inventors have their patents stolen by.... the corporations who whine and cry about patent trolls.

    Manufacture and marketing? Licensing and royalties without lawyers on retainer? Don't make laugh. Most indie inventors have nowhere NEAR that kind of money and finding a VC is almost the same as having it stolen anyway.

    SMC Networks is a patent troll. (and their likes) Holding companies that pay inventors are not.

  27. Brent Beach

    That some podunk jury in Texas can make decisions like this and award settlements like this makes the US justice system a joke.

    Justice for sale.

    The good guys have to take this to the limit and break this freaky system of patent trolls.

    The trolls have another half a billion to fund even more flaky law suits based on even more absurd patents. It will never end until the US congress does something.

    Wait. Anything that relies on sensible action from the US congress is just not ever going to happen.

  28. Robert Baker
    WTF?

    Slide to lock/unlock?

    Surely that idea has been known for centuries — it's called a "bolt".

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