What's Up With Apple: Patent Troll Wins, Russia Gives Up, and More

A federal district court jury in eastern Texas has ruled that Apple Inc. (NASDAQ: AAPL) must pay $308.5 million to Personalized Media Communications for infringing the Sugar Land, Texas-based firm’s patent related to digital rights management.

The Texas company had calculated that Apple owed it $240 million in royalties for the use of a patent that Apple uses to distribute encrypted content from the App Store, iTunes and Apple Music. The jury award included a so-called running royalty that is based on how many units Apple sells rather than a single lump-sum payment.

In a statement to Bloomberg News, Apple expressed its disappointment with the ruling: “Cases like this, brought by companies that don’t make or sell any products, stifle innovation and ultimately harm consumers.”

Personalized Media filed the complaint in 2015, and Apple successfully challenged the patent’s validity in a hearing in front of the Patent Trial and Appeal Board. The federal appeals court reversed that decision last year and the federal district court judge last week denied Apple’s request to invalidate the patent. The patent troll lost a lawsuit it had filed against YouTube on different patents and has a suit currently pending in New York against Netflix.

Beginning next month, when iPhone users in Russia set up their new phones, they will be asked to install a government-approved list of apps made by Russian developers. The inquiry is a compromise with the government that in 2019 passed a law that requires all computing devices to be sold with state-approved Russian-developed apps pre-loaded. The approved apps include browsers, messaging apps and antivirus services, according to a report from Ars Technica.

Apple’s compromise does not require the company to pre-load the apps, and Russian users can decline to download them. This deal is far less invasive than the hoops Apple has agreed to jump through in China. Russia’s population of around 144 million is just over 10% of China’s, so Apple is much more interested in meeting demands from China.

According to Ars Technica, in order “to continue operating in China, Apple agreed to use a domestic cloud provider to store its Chinese customers’ iCloud data and encryption keys. And Apple removes apps from its Chinese iOS App Store when the government demands.”

But ordinary Russians, like their Chinese counterparts, have figured out ways around and through Russia’s not-so-great firewall.

Finally, Apple filed a proposed witness list late Friday in the Epic Games lawsuit, challenging Apple’s 30% royalty demand for apps and in-app purchases. The list includes Apple CEO Tim Cook, Epic’s CEO Tim Sweeney and a number of top executives from both companies, along with a smattering of executives from Microsoft, Facebook and Nvidia.

Apple commented on the proposed witnesses in a statement to TechCrunch:

Our senior executives look forward to sharing with the court the very positive impact the App Store has had on innovation, economies across the world and the customer experience over the last 12 years. We feel confident the case will prove that Epic purposefully breached its agreement solely to increase its revenues, which is what resulted in their removal from the App Store. By doing that, Epic circumvented the security features of the App Store in a way that would lead to reduced competition and put consumers’ privacy and data security at tremendous risk.

The trial is expected to begin on May 3.