Federal appeals court declines to stay Smartflash case against Apple

Posted:
in iPod + iTunes + AppleTV edited August 2015
On Thursday, the U.S. Court of Appeals for the Federal Circuit refused to stay proceedings in Smartflash's patent lawsuit against Apple, potentially paving the way for Smartflash claiming recalculated damages.




Samsung -- which is facing a separate Smartflash suit -- has however been granted a halt to proceedings while the validity of patents is determined by the U.S. Patent and Trademark Office, Reuters said. The outcome could influence the course of Apple's case.

In February, Smartflash won a $532.9 million verdict against Apple, claiming that services like the iTunes Store, App Store, and iAd violated three patents connected to "data storage and managing access through payment systems." Smartflash does not sell any products or services of its own, and instead relies on patent licensing and lawsuits to generate revenue.

Earlier this month though U.S. District Judge Rodney Gilstrap tossed out the initial verdict, stating that his jury instructions may have improperly affected the damage assessment. With today's ruling, a September 14 damages retrial should be set to go ahead.

Apple has very vocally defended its position, accusing Smartflash of exploiting the U.S. patent system despite having no U.S. presence, and contributing nothing to the economy in terms of jobs or products.

Comments

  • Reply 1 of 15
    gatorguygatorguy Posts: 20,055member
    sog35 wrote: »
    I want to see more about the Microsoft vs Google/Motorolla case.

    Looks like Google lost.  They were trying to charge Microsoft 2.25% royalty fee on the ENTIRE DEVICE for using standard essential patents.  Google was trying to get $4 billion in royalties.  LOL.  Judge said no.  Only $8 million.

    That Motorolla $12 billion acquisition by Google is looking worse and worse by the day.

    On Google's books those Motorolla patents are valued at over $5 billion.  LOLLLLLOOOLLLLOLLLOLOLL!!!  Looks like Google will have to take a massive write off on those and show a $5 billion loss.
    This is a poster-child example of why posts go off-topic. :\ One lawsuit has nothing to do with the other and it wasn't Google's lawsuit in the first place. It's Motorola's who is now owned by Lenovo.

    As for the IP you mentioned, in the end I think it's been calculated that the patent portfolio (17K of them?) that Google kept cost them around $2B which would be quite a bargain really. I can do a search if you'd like. No "write-off" for the IP will be needed anytime soon AFAIK

    EDIT: I was wrong. Looks like the patents cost them $1.5B and not $2B.
    http://www.forbes.com/sites/timworstall/2012/12/22/did-motorola-mobility-only-cost-google-1-5-billion/
  • Reply 2 of 15
    gatorguygatorguy Posts: 20,055member
    sog35 wrote: »
    Google still owns the Moto patents.  

    "After a 2012 trial, U.S. District Judge James Robart in Seattle said the appropriate royalty rate was $1.8 million, far less than Motorola's demand for as much as $4 billion a year. A jury later found Motorola in breach of contract. Google appealed the verdict and the royalty rate to the 9th Circuit."

    http://www.reuters.com/article/2015/07/30/us-microsoft-google-patents-idUSKCN0Q42L520150730

    Its Google who is in court fighting for $4 billion from microsoft.

    Tell how those patents are worth $5 billion (that is their book value) when they only produced a few million in royalties the last 3 years?  

    It's still Motorola's lawsuit. Even per your own link "The case is Microsoft Corp vs. Motorola Mobility Inc et al, 14-35393". More details on the case here:
    http://www.essentialpatentblog.com/2015/04/ninth-circuit-to-hear-oral-argument-on-motorolas-appeal-of-judge-robarts-ruling-microsoft-v-motorola/

    Sog, do you think the only company paying royalties on former Motorola IP is Microsoft? Where the heck do you find there's only $3M in royalties over the past three year?. In addition if royalties was the only basis for patent value Apple's IP can't be worth much at all can it? Geesh you seem to make it up as you go sometimes.

    As for the taxes you say can't be written off there are multiple reports from business publications and tax professionals noting they can write off up to $700M per year against their profits thru 2019.

    But again, why are you posting off-topic in the first place? It's a bit trollish to do so isn't it?
  • Reply 3 of 15
    tmaytmay Posts: 3,464member
    Quote:

    Originally Posted by Gatorguy View Post





    This is a poster-child example of why posts go off-topic. image One lawsuit has nothing to do with the other and it wasn't Google's lawsuit in the first place. It's Motorola's who is now owned by Lenovo.



    As for the IP you mentioned, in the end I think it's been calculated that the patent portfolio (17K of them?) that Google kept cost them around $2B which would be quite a bargain really. I can do a search if you'd like. No "write-off" for the IP will be needed anytime soon AFAIK



    EDIT: I was wrong. Looks like the patents cost them $1.5B and not $2B.

    http://www.forbes.com/sites/timworstall/2012/12/22/did-motorola-mobility-only-cost-google-1-5-billion/

    The comments are not favorable to the writer's analysis, some saying his assumptions are wrong, and others adding that the tax benefits follow Motorola; they won't continue to go to Google after the sale to Lenovo.

     

    This doesn't seem like an analysis that I would consider very reliable, especially after the sale.

  • Reply 4 of 15
    gatorguygatorguy Posts: 20,055member
    sog35 wrote: »

    Plus that article is wrong since Google can no longer take those TAX LOSES deduction since they sold Motorola.
    I believe you would be wrong yet again.
    tmay wrote: »
    The comments are not favorable to the writer's analysis, some saying his assumptions are wrong, and others adding that the tax benefits follow Motorola; they won't continue to go to Google after the sale to Lenovo.

    This doesn't seem like an analysis that I would consider very reliable, especially after the sale.
    The Forbes writer was not the only one to report the tax writeoffs to Google's benefit:

    "The tax benefits of the deal make what was a good deal into a great deal," said Robert Willens, a New York accounting and tax expert. He estimated that through the acquisition, Google can expect to reap $700m a year in tax deductions from future profits each year through 2019. Google also will be able to immediately reduce its taxes by $1bn due to Motorola Mobility's US net operating loss, and by a further $700m due to its foreign operating loss, he said."

    So what makes Willens a reliable expert on taxes you may be asking?
    http://www.bna.com/robert-willens-h2147483823/

    I think you can probably trust his analysis even if you don't trust the Forbes writer, don't you agree?

    Now back on track with Smartflash and Apple. Can you believe there's been over 500 actions in this case so far? Crazy.
    https://dockets.justia.com/docket/texas/txedce/6:2013cv00447/144874
  • Reply 5 of 15
    ppietrappietra Posts: 171member
    Quote:

    Originally Posted by Gatorguy View Post





    It's still Motorola's lawsuit. Even per your own link "The case is Microsoft Corp vs. Motorola Mobility Inc et al, 14-35393". More details on the case here:

    http://www.essentialpatentblog.com/2015/04/ninth-circuit-to-hear-oral-argument-on-motorolas-appeal-of-judge-robarts-ruling-microsoft-v-motorola/



    Sog, do you think the only company paying royalties on former Motorola IP is Microsoft? Where the heck do you find there's only $3M in royalties over the past three year?. In addition if royalties was the only basis for patent value Apple's IP can't be worth much at all can it? Geesh you seem to make it up as you go sometimes.



    As for the taxes you say can't be written off there are multiple reports from business publications and tax professionals noting they can write off up to $700M per year against their profits thru 2019.



    But again, why are you posting off-topic in the first place? It's a bit trollish to do so isn't it?

     

    The patents belong to Google and it is Google who is the plaintiff in the case now.

    There is another case where Motorola was and continues to be a defendant and that is the one that you mention, about Motorola failing its FRAND obligations when seeking for patent royalties against Microsoft.

    As for tax benefits your 2012 article quote doesn’t say how much Google benefited until 2014, it only mentions maximum benefits. Nor can it say what happened after Motorola was sold in 2014. Under normal circumstances those tax benefits should continue with Motorola, not with Google.

  • Reply 6 of 15
    gatorguygatorguy Posts: 20,055member
    ppietra wrote: »
    As for tax benefits your 2012 article quote doesn’t say how much Google benefited until 2014, it only mentions maximum benefits. Nor can it say what happened after Motorola was sold in 2014. Under normal circumstances those tax benefits should continue with Motorola, not with Google.
    See post 7
  • Reply 7 of 15
    tmaytmay Posts: 3,464member
    Quote:
    Originally Posted by Gatorguy View Post





    I believe you would be wrong yet again.

    The Forbes writer was not the only one to report the tax writeoffs to Google's benefit:



    "The tax benefits of the deal make what was a good deal into a great deal," said Robert Willens, a New York accounting and tax expert. He estimated that through the acquisition, Google can expect to reap $700m a year in tax deductions from future profits each year through 2019. Google also will be able to immediately reduce its taxes by $1bn due to Motorola Mobility's US net operating loss, and by a further $700m due to its foreign operating loss, he said."



    So what makes Willens a reliable expert on taxes you may be asking?

    http://www.bna.com/robert-willens-h2147483823/



    I think you can probably trust his analysis even if you don't trust the Forbes writer, don't you agree?



    Now back on track with Smartflash and Apple. Can you believe there's been over 500 actions in this case so far? Crazy.

    https://dockets.justia.com/docket/texas/txedce/6:2013cv00447/144874

    All of that was before the sale of Motorola to Lenovo and those tax benefits may not have carried past the sale. Do you have any links that are more recent than 2012?

     

    The only thing of interest for me is what the variations of value of the patent portfolio is.

  • Reply 8 of 15
    raptoroo7raptoroo7 Posts: 138member
    And Apple does the same thing, abuses the patent system every day of the week. Creating things that will never be made, conjuring up ideas that are bogus at best and at worst copy from others. That said, they can afford the penalty and they are no white knight so get over it already.

    Should they lose, I hope the patent holder does NOT license to Apple and forces them to rebuild their systems. This will strike one blow against them.
  • Reply 9 of 15
    ppietrappietra Posts: 171member
    Quote:

    Originally Posted by Gatorguy View Post





    See post 7

    Is that suppose to change anything? You are still quoting information from 2012 - actually 2011 - that only states maximum possible benefits and not what Google was actually able to use nor what happened with 2014 sale.

    Tax benefits aren’t transferable, they stay in the company and require certain conditions to be used. Google benefited from them because Motorola was its subsidiary. The only way for Google to keep the benefits was if they kept the original Motorola Mobile company and only sold assets to Lenovo, but as far as I know there is no proof that they did that.

    And if you read Google 2014 financial statements where it mentions Motorola deal you will see that it got much less than 700 million tax benefits per year in 2012, 2013, 2014, from Motorola business.

  • Reply 10 of 15
    singularitysingularity Posts: 1,329member
    Back on topic. How much are Apple liable in new damages then?
  • Reply 11 of 15
    gatorguygatorguy Posts: 20,055member
    Back on topic. How much are Apple liable in new damages then?
    There will be a new damages trial, perhaps sometime in September I think. Not certain. Even higher damages are possible in the second go-round but at least the question of willfulness was settled. Gilstrap ruled it was not.

    Note too that there is a second Smartflash lawsuit filed against Apple which hasn't reached trial yet. It may get confusing.

    [@]Ppietra[/@], thanks for pointing out the comment was the Moto acquisition and not sale. You could be correct and I might be wrong but it's not clear either way. In Google comments after the Lenovo sale they said that after asset sales and tax benefits the patent portfolio actually cost the company between $2.5 and $3.5 billion. They didn't explain why the $1B was variable. They compared it to the Nortel patent sale to Apple/MS that went for $4.5B, saying Moto's ended up the better deal.

    Thanks for pointing the date out to me! Maybe now the thread can stay on topic. Any reader trying to find out more about the Smartflash case has to weave thru a dozen posts to find anything pertinent to it when the first post out of the gate is on a different and unrelated topic altogether.
  • Reply 12 of 15
    ppietrappietra Posts: 171member
    Quote:

    Originally Posted by Gatorguy View Post





    There will be a new damages trial, perhaps sometime in September I think. Not certain. Even higher damages are possible in the second go-round but at least the question of willfulness was settled. Gilstrap ruled it was not.



    Note too that there is a second Smartflash lawsuit filed against Apple which hasn't reached trial yet. It may get confusing.



    @Ppietra, thanks for pointing out the comment was the Moto acquisition and not sale. You could be correct and I might be wrong but it's not clear either way. In Google comments after the Lenovo sale they said that after asset sales and tax benefits the patent portfolio actually cost the company between $2.5 and $3.5 billion. They didn't explain why the $1B was variable. They compared it to the Nortel patent sale to Apple/MS that went for $4.5B, saying Moto's ended up the better deal.



    Thanks for pointing the date out to me! Maybe now the thread can stay on topic. Any reader trying to find out more about the Smartflash case has to weave thru a dozen posts to find anything pertinent to it when the first post out of the gate is on a different and unrelated topic altogether.

     

    THere was a lot of sugar coating in that interview. What he tried to imply (somewhat deviously) contradicts a lot of things that were declared in Google’s own financials and ignores the losses Google had with Motorola while running the business - it lost $2.6B and only got 541million in tax benefits, with a $1.4B total loss from operation and disposal of Motorola. And the "money" they got from the sale to Lenovo includes the licensing of those patents for a very long time, so $3B is not just from selling the company. 

    Add to that, when they bought Motorola they valued the intangible assets acquired [patents and technology] at around $5.5B, but by 2014 they had already reevaluated those assets to less than $3B, so clearly they made some big mistakes evaluating Motorola’s patents when they bought it. It was not that the patent portfolio cost 2.5-3.5B but that it is its actual current value in Google financial books. 

    Doing the math: $8.5B cash + $3B current patent assets - $1.4B opertation loss - $12.5B acquisition = -$2.4B loss

    And the loss could be higher than that, since patents value is actually lower than $3B and some of the cash was for licensing.

  • Reply 13 of 15
    gatorguygatorguy Posts: 20,055member
    ppietra wrote: »
    Is that suppose to change anything? You are still quoting information from 2012
    You have a point. It may not be as clear as I thought. See PM.
    ppietra wrote: »
    THere was a lot of sugar coating in that interview. What he tried to imply (somewhat deviously) contradicts a lot of things that were declared in Google’s own financials and ignores the losses Google had with Motorola while running the business - it lost $2.6B and only got 541million in tax benefits, with a $1.4B total loss from operation and disposal of Motorola. And the "money" they got from the sale to Lenovo includes the licensing of those patents for a very long time, so $3B is not just from selling the company. 
    Add to that, when they bought Motorola they valued the intangible assets acquired [patents and technology] at around $5.5B, but by 2014 they had already reevaluated those assets to less than $3B, so clearly they made some big mistakes evaluating Motorola’s patents when they bought it. It was not that the patent portfolio cost 2.5-3.5B but that it is its actual current value in Google financial books. 
    Doing the math: $8.5B cash + $3B current patent assets - $1.4B opertation loss - $12.5B acquisition = -$2.4B loss
    And the loss could be higher than that, since patents value is actually lower than $3B and some of the cash was for licensing.

    OK. thanks again for the opinion. :) ...and FWIW Microsoft won the 3-judge Fed appeal today The value of SEP's may be impacted depending on how other courts decipher it, something Nokia and Qualcomm won't like hearing. The patent standards in Apple and Google's portfolios aren't there for revenue anyway, but Microsoft apparently is willing to forgo royalities they are getting from FRAND-pledged IP. My guess is they must be paying more than they're receiving in return?

    Anyway. back to the topic if we can.

    Any comments on Smartflash and Apple?
  • Reply 14 of 15
    elrothelroth Posts: 1,201member
    Quote:

    Originally Posted by RaptorOO7 View Post



    And Apple does the same thing, abuses the patent system every day of the week. Creating things that will never be made, conjuring up ideas that are bogus at best and at worst copy from others. That said, they can afford the penalty and they are no white knight so get over it already.



    Should they lose, I hope the patent holder does NOT license to Apple and forces them to rebuild their systems. This will strike one blow against them.



    Keep hoping - it ain't going to happen. Apple will end up owing very little, probably nothing, for these obvious patents, which could very well be declared invalid - they're so general as to be ridiculous.

     

    Please enlighten us on exactly how Apple is abusing the patent system in the same way. Apple has patented a lot of ideas they haven't used (yet), but they haven't sued anyone over them. Their lawsuits have been over tangible products.

     

    Sorry your Apple-hatred has eaten away your rationality. (Yeah, the patent troll will teach Apple a lesson - hilarious).

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