Jersey inventor may never see $533m Apple damages award

Monday 09 January 2017

A Jersey inventor, whose company once had an advertising contract with Britney Spears, may not get to see his money after winning $533million in a patent trial against Apple, it has emerged.

Following a jury trial last year, Apple was ordered to pay the half a billion sum to Smartflash LLC – a company owned by Jersey man Patrick Racz, described on his company's website as a, "...visionary and highly successful entrepreneur” - for wilful infringement of three US patents.

The patents related to online payment technology, and were judged to have been breached by Apple - but doubt has now been cast on that judgement and the damages award has been set aside.

Mr Racz had registered many patents in the late 90s – shortly before the explosion of MP3 players and iPods onto the market – in the hope of riding the digital music curve and making his own digital media player.

It was a bright start for the company, who successfully secured the endorsement of Britney Spears (video below). By 2002, however, a combination of Miss Spears’ ill-fated European tour - cancelled following the 9/11 terror attacks – and a partner company walking away from the deal left Mr Racz out of pocket and without a product. 

According to Smartflash lawyer, Brad Caldwell, Mr Racz, “…pulled together every cent he had to complete the patent applications,” but was ultimately left bankrupt.

His subsequent lack of product has proven controversial, drawing strong criticism from those who believe Mr Racz to be a ‘patent troll’ – a pejorative term for a person or company who do not manufacture products or supply services.

At the more extreme end, Mr Racz claimed to have even received anonymous death threats.

Apple itself weighed in on the debate, accusing Smartflash of, “…exploiting our patent system to seek royalties for technology Apple invented.”

“We refused to pay off this company for the ideas our employees spent years innovating and unfortunately we have been left with no choice but to take this fight up the court system,” the iPhone manufacturer said in a statement.

Pictured: A product created by Smartflash in the early 00s, which was endorsed by Britney Spears. (Screenshot: Youtube/Bailiwick Express)

But Mr Racz defended himself in an article for the Huffington Post, rebuffing Apple’s, “…false sense of injustice.”

“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,” he wrote.

“Contrary to Apple’s misleading press statement, it wasn’t Apple’s choice to fight this through the court system and it was in fact our decision to go to trial. Our sense of vindication and relief at proving wilful infringement in front of my family, who I had put at risk through my belief in the patent system and dedication to my idea, was however tainted by the media barrage that Apple instigated before the ink was even dry on the verdict form.”

Pictured: The website of Smartflash, a company owned by Jersey inventor, Patrick Racz.

Despite the unanimous jury verdict, Mr Racz still hasn’t “received a penny” of the damages awarded, and is sure that he won’t until, “…all avenues of appeal have been exhausted.”

“One thing I can guarantee is that I won’t be lurking under a bridge anytime soon. Inventor? Yes. Patent troll? No.”

Mr Racz declined to comment further while appeal proceedings are ongoing.