Appeals court invalidates Smartflash patents that Apple was ordered to pay $533M for infringing
Massive verdict would have been largest ever for a non-practicing entity. — It looked like Smartflash LLC had Apple right where it wanted it after a jury awarded the patent-holding company $533 million …
Context & Ripple Effects
Smartflash's run at Apple began with a $532.9M jury verdict in February 2015 over iTunes-related patents — which would have been the largest award ever for a non-practicing entity. Within months a judge had voided the award and ordered a new damages trial, and Smartflash doubled down by suing again over the same patents as used in the iPhone 6/6 Plus and iPad Air 2.
The appeals court's invalidation of the patents themselves ends both tracks at once: there is no damages trial to re-run and no surviving patent for the follow-on suit to rest on. It also lands mid-pattern for Apple, whose parallel fight with VirnetX went the other way — USPTO invalidated those patents too, yet a federal judge still let a $502.8M verdict stand in 2021.
First-order effects
- Apple is off the hook for the full $533M award, and Smartflash's second lawsuit over the iPhone 6/6 Plus and iPad Air 2 loses its legal foundation along with the patents.
Second-order effects
- The case hands Apple and other deep-pocketed defendants a template: challenge validity through the appeals process rather than only contesting infringement or damages, since a single invalidation can erase an entire verdict.
Third-order effects
- If invalidation keeps deciding these outcomes, non-practicing entities face rising odds that even a jury win yields nothing — pushing litigation finance toward patents that survive post-grant review and away from broad software claims like Smartflash's.
The trend: Appellate and USPTO invalidations are becoming the decisive battleground in large patent-verdict fights between non-practicing entities and major tech companies, as the divergent Smartflash and VirnetX outcomes show.