How mighty Apple lost $533 million to an 8th-grade dropout patent troll

Earlier this week Apple Inc. “was ordered to pay $532.9 million to Smartflash LLC for willful infringement of three U.S. patents,” Philip Elmer-DeWitt reports for Fortune.

“You don’t have to love the U.S. patent system or non-practicing entities (A.K.A. patent trolls) to wonder: How the hell did Apple lose this case?” P.E.D. reports. “I wasn’t able to reach Apple’s attorneys, but I did have a chat with Brad Caldwell, the Dallas-based patent infringement specialist who represented Smartflash. He tells a curious story.”

“Apple, he says, ‘paraded witness after witness through courtroom who couldn’t be bothered to read the patents,'” P.E.D. reports. “When Apple’s lawyers got Racz on the stand they brought up his education (he left school at 8th grade), his horticultural training, the fact that he was from a farming family on the Isle of Jersey… ‘They thumbed their nose at other people,’ says Caldwell. ‘They acted like we’re Apple and have no need to respect other people’s intellectual property.’ The jury, I’m told, was paying close attention.”

Read more in the full article here.

MacDailyNews Take: Protecting intellectual property is really, really important – unless it’s Apple’s intellectual property, of course.

[Thanks to MacDailyNews Reader “David E.” for the heads up.]

Related articles:
On heels of $532.9 million verdict, Apple hit with second lawsuit from Smartflash – February 27, 2015
Apple plays the odds for overturning rocket docket’s $533 million verdict – February 26, 2015
Rocket docket jury orders Apple ordered to pay $532.9 million in patent trial; Apple to appeal – February 25, 2015


    1. Agreed.

      While, contrary to the impression many non-Texans hold, much of Texas is reasonably sophisticated (especially in urban centers like Dallas/Fort Worth, Austin, Houston and San Antonio). East Texas, however, cannot be so characterized. It is predominantly working class (oil industry) and agricultural. An appeal to snobbery would naturally fail utterly.

      One would think that, as many times as Apple has been forced to visit the federal courthouse in Tyler, Texas, it would have learned the lay of the land by now.

    2. So PED doesn’t bother talking to Apple, nor read the transcript, just to SmartFlash’s lawyer, and falls hook, line and sinker for their story? It didn’t occur to him there might be a little bias there?
      Gimme a break, please…

    3. It seems Apple had a NY law firm (Ropes & Gray) on this case whereas Smartflash had TX lawyers. Maybe Apple just got hometowned – it’s known to happen a lot in TX. As TechSHIZZLE says, opposing counsel is hardly a credible source for what actually happened. But I wonder who picks Apple’s lawyers for some of these cases. They do seem to come off as arrogant sometimes (remember the Brit fiasco where Apple had to publicly apologize for suing Samsung?)

  1. Assuming the holder of the patent is simply a patent troll who has created nothing for society, I suggest we send him over to Iraq so he can star in the next ISIS video.

      1. The article mentions something that raises a red flag; the guy splits his time between the island of Jersey in the English Channel, and London. If I am not mistaken, the Channel Islands (Jersey, and Guernsey), much like the Isle of Man, are British dependencies and a very popular tax haven for shady UK businesses. Many people who want to avoid UK taxation on income have their non-UK revenue and income sent to banks in Channel Islands or Isle of Man, outside of reach of the Inland Revenue (now Revenue and Customs). A Londoner who spends ‘half of his time’ in Jersey usually does it to avoid taxes.

        This tends to reinforce the idea that we’re dealing with an ordinary patent troll.

        1. From the article: “When Apple’s lawyers got Racz on the stand they brought up his education (he left school at 8th grade), his horticultural training, the fact that he was from a farming family on the Isle of Jersey.” Since when was growing up on a farm in Jersey indicative that the guy was using the the territory as a tax haven?? That’s quite a leap. Maybe he was a farmer’s son who happened to be good at tech. And you are mistaken – Jersey is not a British dependency. Look it up on Wikipedia.
          I’m not defending patent trolls and I’m not defending outrageous awards such as this. But this guy doesn’t seem to be the usual patent troll. He invented something that Apple and a lot of others are using. Their arguments are over value – Apple valued his patents at $5mm.
          This tends to reinforce the idea that Apple is not dealing with an ordinary patent troll.

        2. Sure, and anyone who claims tax loopholes is a tax cheat? What a load of crap. If I lived in the UK, and had the money in need of shelter, I would do the same as he did. Feel free to give what you like to the government, surely they can spend it better than you can, but as for me, I happen to believe that my spending choices are far better than public works projects that build bridges to nowhere.

          1. Well, it is not exactly legal to do that, if you also officially have a residence in London.

            In a way, it is like in America, ordering online from out of state in order to avoid paying sales taxes. By law, you are required to report such purchases and pay sales tax in your home state, but nobody does it. This is the same, only on much greater scale.

    1. Now that isn’t very patriotic to your stars and stripes. You really should consider something closer like, Guantanamo Bay, you know support your local community. They’ll get the job done as good as any other professional terrorist organization.

      1. You are quite wrong and incredibly ignorant. Club Gitmo treats POWs so humanely that they gain weight. They have A/C, their own Korans, defense counsel, workout rooms, and on and on — all paid for by the US taxpayer. So, the US has bent over backwards to keep these prisoners safe. That, I think, is an incredible waste of money.

        However, how many prisoners at Gitmo have died in captivity? None that I know of. How many people die every week from the Islamic caliphate? And how are they treated? And how do they die? Your bigotry is wholly unsupported by the facts.

        I suggest that you go and join the Islamic caliphate, since you are such a good apologist for them. They need you, brother jihadi. Allah akbar!

  2. It’s not the end, but the beginning. The Tyler court is infamous for finding in favor of patent trolls. Frequently however, once the sensational headlines have long faded, cases like these are overturned on appeal (and in less insane courtrooms).

    Whether the case ever being overturned would be reported is less likely. After all, that’s not sexy enough of a headline for Business Insider…

  3. I can come up with 532.9 million reasons that a Tyler Tx jury would award this kind of money to a local citizen. A hell of a boost to the local economy, that said, take a look at his patents. 8th grade drop out or not, he’s no dummy.

    1. Not a local citizen. Smart flash is headquartered there, so its cases will be heard in the East Texas District Courts. The owner is a UK citizen who lives in London and the Isle of Jersey.

      That all said, how was his education relevant? Would the patents have been more valid if he had a PhD from Harvard? Apple needs to get some A-list attorneys. I’d suggest selecting from the membership list of the Judges country club.

  4. Seriously Apple your doing good right now but don’t start doing stupid s***. These lawyers you hired are not representative of the type of company you are if they attacked the plaintiffs in this manner. It’s no wonder that you lost this time.

  5. The jurisdiction is controlled by the neocons, the very people you all love.

    Apple is guilty under the current law. The president and the democrats tried to change this and were excoriated by the Republicans.

    Have a nice day and pay up.

    Neocons represent corporate robber barons at their finest.

    Tell that to the asshats who keep posting here.

    1. No. There are no “neocons” in Tyler. There are plenty of paleocons, socialcons, and libertarians there. Hell 30% of the population there can be described as blue dogs and liberals. However, neocons are your pro-war, pro-Israel, pro-American power, don’t care about social issues people who dragged us into Iraq in 2003 (Cheney, Rumsfeld, Wolfowitz, Feith, Bremer, Kristol). Those people don’t exist in places like Tyler.

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