Apple Must Pay $533 Million for Patent Infringement, Judge Says

Rolling Stone ^ | 2-25-2015 | KORY GROW

[IncPen]

How, exactly does that align with how iTunes stores and retrieves data? Indeed, removable flash storage, itself, is a broad concept that has been in use longer than the patent has been issued.

I'm not a lawyer and I've only read the suit, not the patents.

What I know of SmartFlash is that it was a USB device for accessing multimedia content securely via a digital signature, then uploading, downloading and purchasing content to, from and via the device.

To understand how this was viewed at the time, here’s a ‘fanboy’ posting that I shared with Swordmaker. It's not my writing or point of view, but it offers insight into the device and why it was considered innovative.

[Swordmaker]

I did not mean any offense Swordmaker. I have always valued your advice and the knowledge that you have of Apple products. I was strictly quoting from articles that I have read on multiple occasions all of which have indicated that Apple is spending far, far more than $375 million on their legal team. To be honest I am completely baffled by your figure. Are you carefully choosing your words by saying “legal defense” which may have a more specific meaning than legal team? If so then shame on you.

The only thing that REALLY offends me is false data, fireman15. . . and that was what you were posting. I am not offended at you. However, you are wrong about your links you are providing. MY DATA on Apple's legal costs are correct. $375 MILLION is a HUGE amount of money, and will buy you a lot of legal work. Let's look at your links:

The first one from Gizmodo's title is claims that "Apple and Google spent more on legal fees than R&D last year and that Google apparently thinks that Apple wants it that way". At least that is the title of the opinion piece written someone named Adrien Covert. . . a blogger who has no background at all in anything except blowing. Notice the one thing he DOES NOT INCLUDE in his article is any dollar figure for how much Apple or Google spends on their legal expenses. This bozo also claims that Apple spends far less than any other major He PLUCKS his gem out of thin air: "That's far less than nearly every major company in tech," when that is patently false because $3.4 Billion dollars is more than MOST every major company in tech makes! The rest of his conclusions he seems to have pulled out of his nether orifice, especially the one about spending more on legal costs than R&D. Oh, he does seem to lump capitol asset IP acquisitions in his "legal" expenses. . . showing he has no idea of what he is talking about in business accounting.

Has Apple slashed their legal teams budget and thrown hundreds of hapless ambulance chasers back out on the streets? It doesn't appear so... I will bring to your attention an article that headlines that Apples legal budget increased to $3.4 billion dollars in 2012:

Really? Read that headline again, fireman15. That is NOT what that headline states! Not at all. Here, let me post it for you: "Apple's R&D spending climbs $1 billion to $3.4 Billion during FY 2012"/.

Nowhere in that linked article does it say that Apple's legal expenses climbed to $3.4 Billion as you just claimed it did. . . in fact, no where in that article are legal expenses even mentioned! Sorry. BZZZZTTTT!

As for you third link, which claims the following:

"Apple remains one of the smallest R&D spenders compared with its peers. Microsoft, for instance, spent $10.4 billion, or 13 percent of the company's revenue, on research during its 2013 fiscal year, which ran through June. There's also Google, which has spent $5.8 billion so far this year (and $9.8 billion in all of 2012), as well as Samsung, which spent around $10.5 billion on R&D last year and which is currently building a massive new facility in Silicon Valley .

Perhaps a closer comparison is Amazon, which has spent $4.7 billion so far this year, already beyond the $4.6 billion it spent during all of last year.

Can you show us exactly what fruits and products Microsoft, Google, and Samsung have brought to market that can possibly JUSTIFY those huge expenditures? What are they? Windows 8.1 update? MicrosoftPhone? GoogleGlass? Autodriving cars? Samsung's next Galaxy me too phone iteration that looks like their last phone but with a couple of added bells and whistles? Amazon Kindle what????

Apple's very targeted R&D has brought more BANK for their buck in their research than any of these companies' R&D has. . . save, perhaps Samsung and the research they do on basic chip and screen technology, but even there Apple's bottom line is far better.

Then, the article STILL does not reference anything about Apple's legal expenses. Nothing at all.

My friend, the claim that Apple or Google spend more on legal expenses than R&D is bogus and I think it may have gotten its earliest start with our idiot blogger Adrien Covert who essentially pulled it out of his ass and other bloggers took it and ran with it.

I have been shooting this canard down for quite some time with facts. . . but it STILL keeps popping uphat's why I respond a bit testily. These false stories and myths take on a life of their own . . and are like fighting the hydra. Chop one head off and two more grow back. That's why I respond a bit testily. Sorry about that.

[Swordmaker]

As Emily Latella Gilda Radner would have said on SNL in the late 1970s... “NEVER MIND”!

LOL!

[Swordmaker]

As Emily Latella Gilda Radner would have said on SNL in the late 1970s... “NEVER MIND”!

You still might want to read my response. . .

[Swordmaker]

How, exactly does that align with how iTunes stores and retrieves data? Indeed, removable flash storage, itself, is a broad concept that has been in use longer than the patent has been issued.

The concept appears to be a proprietary Flash drive with a ROM in it that would connect your computer securely to a server which would know that you were authorized to do business with it because you had the flash drive.

[Swordmaker]

It appears in retrospect that what sank SmartFlash is that it was quickly superseded by better implementations, and the fact that it was a tough sale at the time.

It was superseded by technology that did not require user to buy proprietary technology to take advantage of using the Internet to make purchases or for the sellers to buy into the proprietary system to sell their products on line.

[FreedomCalls]

Smartflash was a USB-connected secure device that logged you into a unique site for purchasing entertainment content; it preceded (even) the iPod by a couple of years.

That is neither unique, novel, non-trivial, nor non-obvious simply because it is done on the Internet.

secure device = Blockbuster membership card
unique site = Blockbuster store
entertainment content = VHS tapes/DVDs

[Swordmaker]

You are free to doubt away, but you are badly misinformed about the case. First, there is no degradation of service at present because Apple gave up on trying to work around either VPN on Demand or FaceTime. However, for the short period when a “workaround” using relay servers was in place, over 50,000 consumer complaints were filed with Apple, so they went back to infringing. Second, while I agree that the term “willful” has not been determined by Judge or jury to date, Apple continues to use technology that they have no license to use. Judge Davis’ penalty on the RRR was, in effect, a determination that Apple was willfully violating VHC patents. You seem to think that the security VHC provides Apple products is inconsequential, but in fact it is the centerpiece of Apple’s Ios system. VHC will introduce at trial that Apple said in the original trial that a workaround would take “about a month” and cost “less than 5 million”, when in fact there is still no workaround and an attempt to do so cost $20 million a month and provided poor quality service. Apple is screwed. Patents not invalid and Apple has been infringing them for almost 10 years. Even if the RRR is reduced, the total dollar amount for prior damages will be huge, and as by then VHC will have an available App for sale that will provide this security to others, the jury will have a cost it can use to peg damages to, which I am certain will be at least as large as originally determined.

You are an advocate for the plaintiffs with a lot of wishful thinking. I know what the appellate court ordered. You apparently believe the lower court can reopen the case and re-try the whole thing de novo. They cannot. They can only re-try what was already decided for damages in the LOWER based on new instructions that are based on what the appellate court has directed. A new jury will start from Apple is guilty of infringing but now determine what is the appropriate royalty rate, based on apportioning the invention's utility to the overall device, not based on the value of the entire device. It will be pennies on the dollar.

[burghguy]

I think no such thing, but you go ahead and think what you want. In determining damages there is nothing that prevents the jury from either considering the “avoidable costs” that Apple has saved by stealing VHC technology or as the CAFC said comparable contracts. VHC has many contracts signed with other companies that are much higher than the RRR awarded in the first case. Apple is only a small part of the VHC story, but Apple fanboys, such as yourself, just don’t get it. Reply if you like, but I will wait for the jury verdict which will be a dollar amount greater than last time. I have no doubt that Apple will use its political connections to again frustrate VHC’s attempt at justice, but an EDTX jury will still return a large verdict against Apple. I use Apple products but I hate thieves and bullies. Ring a bell?

[IncPen]

It was superseded by technology that did not require user to buy proprietary technology to take advantage of using the Internet to make purchases or for the sellers to buy into the proprietary system to sell their products on line.

Yes. But again, as I read it, the crux of the SmartFlash claim concerns USB devices (such as the SmartFlash reader, iPod, and Samsung and Apple phones) that, when connected, authenticate against a unique website to purchase entertainment content.

I have no ax against Apple; having seen the SF technology firsthand at the time, my feeling is that SmartFlash has a claim that (on the surface) at least bears hearing.

[fireman15]

I read your response; I understand your frustration and I am sorry. I am sure that your figures are the most accurate available. As I am getting older, I do seem to be getting more and more like Gilda Radner’s character where I literally can just go off the rails and then realize later that I completely misunderstood something that I read. My tagline is a reminder to myself, but it still happens.

[Swordmaker]

secure device = Blockbuster membership card

How about any credit card? At that time credit cards carried secure information, connected over the Internet, which interfaced with a Server to contained a database of purchaser data to implement a sale. Amazon used it prior to SmartFlash's invention to process sales. . . even using their one-click processing from a computer. That all fulfills SmarFlash's business model patent claims with prior art. Merely moving the secure elements from a card to a Flash memory device is an obvious move.