A JERSEY inventor is reportedly poised to launch a new legal challenge against Apple after claiming the technology giant owes him $18 billion.
Patrick Racz – who won $533 million in compensation for patent infringement by Apple, only to see the award overturned by the American courts – said he is owed the vast sum due to their alleged use of file-sharing and payment technology he says he invented in the late 1990s, when the music industry was about to be transformed by the arrival of digital downloads.
This week, The Times reported that – armed with evidence gleaned from freedom-of-information requests and with $50m of private-investor backing – Mr Racz was set to resume legal proceedings.
‘The technology I invented allowed Apple to become the biggest company in the world, and I still haven’t earned a penny,’ Mr Racz told the newspaper.
‘After 21 years of fighting for justice, the time has come for me and my long-suffering investors to finally get paid.’
Mr Racz says he developed the capability – digital media players and content provision systems to allow for secure downloads and payments – to help monetise the digital music industry in the face of what seemed to be potentially threatening developments. He filed seven patents in 1999.
At the time, he signed up American singer-songwriter Britney Spears as a brand ambassador for his company Smartflash.
But in 2003, Apple unveiled its iPods and its iTunes store – which allow secure online purchase of individual songs and albums – which Mr Racz claims take advantage of the technology he first developed. He claimed other companies, including Samsung and Google, were also profiting from his invention.
Nine years after his first application, the US Patent and Trademark Office granted a patent. It led to Mr Racz bringing proceedings against Apple in the eastern district court of Texas, where, almost ten years ago, a jury awarded him $533m in damages. However, the patent was later withdrawn and the damages award quashed by the US Courts of Appeals.
Apple released a statement saying: ‘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.’
They added that they refused to ‘pay off’ the company for the ideas its employees spent years innovating, and said they had no choice but to take up the fight in the court system.
But Mr Racz branded its response ‘Machiavellian’, and countered with an article he published on online media outlet Huffington Post in which he dismissed suggestions that he was a ‘patent troll’, and vigorously defended his position.
He said: ‘The truth is that 16 years ago I had the foresight to invent something new and truly inventive that would play a leading part in changing the way we pay for and access content.
‘The United States Patent and Trademark Office also believed this to be the case, which is why our patents were granted in the first place.
‘I filed the original patent application in 1999 when mobile phones made and received phone calls, sent and received text messages and had little or no data storage capability whatsoever other than a limited phone number memory.’
