Inventor Patrick Racz in bitter patent war with Apple
Taiwo Oshodi – 29 January 2024
You’d be forgiven for considering Apple a mainstay in the courts in recent years. Most recently ordered to halt its smartwatch sales in the US due to a dispute with the medical tech company Masimo, Apple is once again finding having to ward off patent disputes – kind of. Enter Patrick Racz, co-creator of the filesharing and payment tech company, Smartflash, who claims Apple stole the company’s system tying together digital rights management, data storage and payment systems. The related patents under dispute are said to encompass the access and storing of downloaded sings, videos and games – something Racz alleges the iTunes software infringes on.
Wind back the clock however, and there’s a twist in the tale. Though Smartflash’s patents were applied for in 1999, they were only granted in 2008. Despite the patent being filed in the previous century, the Leahy-Smith America Invents Act allows for ‘a transitional post-grant review proceeding for review of the validity of covered business patents.’ As a result - and upon the approval of the patent - the court doors were opened up for the companies to duke it out over the following couple of years, culminating in Apple needing to pay out $533 million in damages in 2015. The payout was, or would have been, unprecedented, but for Apple appealing on the judgement. The settlement quickly unravelled when only two years later the US Patent and Trial Appeal Board ruled the patents themselves were invalid. In the US, patent law requires applicants to describe an invention to warrant protection. The judges on the Court of Appeals felt that Smartflash did not go far enough in doing this for the patents to hold weight – in a nutshell, the patents were too abstract, and so it was argued that the case should have been closed from the outset.
So what’s the relevance today, seven years on from the patent’s dismissal? Well, Racz is now suing the US Patent Office for not disclosing communications, emails, and documents relating to his case, believing the dismissal of the patents to be a result of Apple’s connection to the courts via ex-employees and other networks. He is, in essence, launching a RICO investigation into the company; the US Department of Justice says the Racketeer Influenced and Corrupt Organizations Act allows plaintiffs to bring together ‘seemingly unrelated crimes with a common objective into a prosecutable pattern of racketeering.’ They’re pretty hefty accusations for sure – backed by a consortium of investors hoping to cash in in case Racz does win the case. Sticking to their argument in 2015, the Apple has said: “Smartflash makes no products, has no employees, creates no jobs, has no US presence, and is exploiting our patent system to seek royalties for technology Apple invented.” It’s certainly no legal argument against the claims, but it does highlight the importance Apple places on the organisation’s complex web of patents... For those interested in patent law it’s definitely worth keeping an eye out on this case as it develops.