Jury orders Apple to pay $308 million in royalties for DRM patent

The federal courthouse in Marshall, Texas.
Enlarge / The federal courthouse in Marshall, Texas.
Photo by Mario Villafuerte/Bloomberg via Getty Images

A jury in the plaintiff-friendly Eastern District of Texas has ordered Apple to pay $308.5 million to a small, privately held company for infringing a patent related to digital rights management. 

An expert for Personalized Media Communications, the plaintiff, estimated that Apple owed $240 million. But after a five-day trial, the jury increased the amount by ordering Apple to pay a running royalty, which bases the award on sales or use of a product. 

The jury found that Apple infringed on one of Personalized Media’s patents when it developed the FairPlay DRM system. That DRM would form the foundation of the iTunes Music Store, which was introduced in April 2003. Initially, the DRM-locked audio files were limited to Mac and iPod users who purchased music through the iTunes Music Store, though usage expanded when Apple rolled the system out to Windows users later that year and again when the company introduced its Apple Music streaming service in 2015. 

Personalized Media had originally filed the lawsuit in 2015, alleging infringement of seven patents. Apple successfully challenged the suit before the Patent Trial and Appeal Board, a legal body of the US Patent and Trademark Office. But last year, a federal appeals court struck down the PTAB ruling, finding that some of Personalized Media’s claims for one of the seven patents were, in fact, patentable. The patent in question was first filed in 1995 but wasn’t granted until 2012, almost a decade after the iTunes Music Store launched.

“Cases like this, brought by companies that don’t make or sell any products, stifle innovation and ultimately harm consumers,” Apple wrote to several outlets in an emailed statement. Apple says it will appeal the new verdict.

Personalized Media is somewhat of an outlier in the patent-holding world given that it claims to only hold and defend patents developed internally. Stereotypical patent trolls file lawsuits to defend patents they hold or acquire from other companies. 

The small company has also filed lawsuits against Netflix, Google, and Akamai. It lost the Google trial late last year.