By Jonathan Stempel
(Reuters) – Apple Inc persuaded a federal judge to throw out a $308.5 million jury verdict it lost to a privately-held licensing firm for infringing a patent associated with digital rights management.
In a Thursday night decision, U.S. District Judge Rodney Gilstrap said Personalized Media Communications LLC (PMC) intentionally delayed filing its application with the U.S. Patent and Trademark Office, hoping to obtain a larger payout.
“This court takes very seriously the prospect of disturbing the unanimous verdict of a duly empaneled jury,” but PMC’s “deliberate strategy of delay” was a “conscious and egregious misuse of the statutory patent system,” Gilstrap wrote.
PMC, based in Sugar Land, Texas, claimed in its 2015 lawsuit that the FairPlay software used in Apple’s iTunes service and App Store to decrypt movies, music and apps infringed its patent obtained in 2012.
But the judge, who sits in Marshall, Texas, accepted Apple’s defense of “prosecution laches,” which can block a patent holder from enforcing a patent after an unreasonable and unexplained delay. Gilstrap said PMC’s delay lasted many years.
Jurors had found Cupertino, California-based Apple liable to PMC on March 19, after a one-week trial.
“PMC respectfully disagrees with Judge Gilstrap’s ruling and plans to appeal,” its lawyer Douglas Kline of Goodwin Procter said in an email.
Apple did not immediately respond to requests for comment.
PMC’s patent application dated to applications filed in the 1980s.
Gilstrap said PMC employed a so-called “submarine” patent strategy, filing serial applications and then keeping its patent portfolio “hidden” until industry widely adopted the underlying technology.
He said PMC would demand licensing fees or allege infringement only after it believed infringement was widespread.
He cited an internal PMC document from 1991 identifying Apple, AT&T, Hewlett-Packard, IBM, Intel and Microsoft as “natural candidates” for its strategy.
A June 1 decision by the federal appeals court handling patent cases made it easier to challenge submarine patents.
(Reporting by Jonathan Stempel in New York; Editing by Aurora Ellis)
