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Apple Wins Patent Infringement Lawsuit, Avoids Paying $308.5 Million

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U.S. District Judge Rodney Gilstrap in Marshall, Texas, has ruled in favour of Apple in a patent infringement lawsuit between the iPhone maker and Personalized Media Communications LLC, letting the former off the hook for $308.5 million USD in running royalties — reports Bloomberg.

Personalized Media sued Apple, alleging that its FairPlay software, used to distribute encrypted content from services like iTunes and the App Store, infringed a digital rights management patent the company owns. Back in March, Personalized Media was awarded $308.5 million USD in running royalties by a jury.

Coincidentally, FairPlay has landed Apple in a legal battle once before, and the Cupertino, California-based tech giant was bailed out by the court back then as well.

PMC’s case against Apple crashed and burned on Friday when Judge Gilstrap ruled Apple was being targeted by a ‘submarine patent’ — PMC applied for this particular patent back in the 1980s, along with hundreds of others, but took advantage of a loophole to ensure the patents would not be awarded until the 2010s, by which time they had become extremely profitable.

This is not the first time Personalized Media has tried to swindle tech companies out of millions of dollars using its cache of patented technologies. PMC has reached settlements with many companies over patent infringement lawsuits, and currently has an open case against Netflix.

“Are we really going to today allow people to enforce patents claiming technology from 1981?” said ex-director of the U.S. Patent and Trademark Office Joseph Matal, who is now with Haynes and Boone. “It makes a mockery of the system to allow this kind of stuff. All of this should have been in the public domain as of two decades ago.”

Judge Gilstrap issued his verdict, saying that Personalized Media “shall take nothing” and will actually have to cover some of Apple’s legal costs to boot.

The loophole that allowed applicants to apply for and cultivate ‘submarine patents’ was patched by the U.S. Patent and Trademark Office in 1995, and a June ruling from the top patent court in the U.S. has made it much easier for companies to challenge ‘submarine patents’.

“The course of conduct undertaken by PMC constitutes an unreasonable delay and an abuse of the statutory patent system,” reads Gilstrap’s verdict.

The case in question is Personalized Media Communications LLC v. Apple Inc., 15-cv-1366, U.S. District Court, Eastern District of Texas (Marshall).

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