Jersey inventor dealt final blow in bitter $533million iPod tech battle with Apple

Tuesday 17 April 2018

A Jersey inventor, whose company once had an advertising contract with Britney Spears, may have been dealt the final blow in a $533million long-running legal battle against Apple that saw him subjected to abuse and death threats from internet trolls.

Islander Patrick Racz this week learned that US courts had upheld a ruling in the iPod manufacturer’s favour, which found that seven patents relating to song storage and payment technology that he had created and alleged were used without due credit to him were ‘invalid’ because they related to concepts rather than concrete products.

The news spells a likely end for a hard-fought five-year row between Apple and his company Smartflash LLC, which was originally due to be awarded damages of over half a billion after a February 2015 jury trial found Apple guilty of breaching the patents.

The inventor had registered them in the late 90s shortly before the explosion of MP3 players and iPods in the hope of riding the digital music curve and launching his own media player set to be endorsed by Britney Spears on her 2002 tour.

But that dream came crashing down when the popstar pulled out of the deal when the tour was cancelled following 9/11, and a partner walked away from the deal, leaving Mr Racz out of pocket and without a product.

Video: Britney Spears appears in a video endorsing a product created by Smartflash. (YouTube/Poisonparadiseaddict)

Despite this, Mr Racz’ control of the patents meant that he could still theoretically cash in if anyone else tried to use the same tech.

According to Mr Racz, Apple did just that – but without paying him a penny. It led him to launch a lawsuit in the ‘patent law capital’ of Texas in 2013. In it, he alleged that he had shared his ideas with a man who later became a senior director at Apple, and that iTunes therefore largely owed its existence – and much of its success – to Smartflash.

While the jury found in his favour, leading to an order to Apple to hand Smartflash $533million, many members of the internet community did not. The inventor came up against accusations of being a ‘patent troll’ – a pejorative term for a person or company who hold patents without actually manufacturing any products. At the more extreme end, Mr Racz even claimed to have received anonymous death threats. 

Despite this, Mr Racz then filed another suit against Apple, as well as also launching into battle with Samsung, Google and Amazon.

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

But his multi-million damages victory was then thrown out two years later after the US Patent and Trademark Office officially dubbed his patents ‘invalid’, and the Court of Appeals dismissed the verdict altogether in March 2017.

The US Supreme Court then said that they would not be prepared to listen to a further challenge by Smartflash, while last week the Court of Appeals upheld the Patent Office’s conclusions – a ruling allowing Google and Samsung to get out of battling Smartflash themselves.

One route still remains open for Mr Racz: he could return before the Supreme Court to appeal. However, with the court already having declined to listen, this is likely means the end of the half-decade-long ‘iBattle’.