Apple Dodges $511M Bullet in Live Video-Streaming Patent Trial

Source: Thinkstock

Source: Thinkstock

Apple (NASDAQ:AAPL) chalked up another win in its seemingly endless patent-infringement battles when a jury recently determined that the iPhone maker is not infringing on another company’s patent for live video streaming. The case revolved around a patent titled “Network media streaming” that is held by Emblaze, a small tech company based in Israel.

In its complaint, Emblaze claimed that Apple’s proprietary HTTP Live Streaming (HLS) video protocol infringes on its patent. “Apple’s HLS is nothing more than Emblaze’s patented solution under a different name,” said Emblaze’s lawyer Martin Pavane, according to Bloomberg.

Emblaze also accused Apple of inducing infringement by pushing other companies to use its HLS video protocol. Seven video-streaming apps were accused of infringing on Emblaze’s patented technology, including MLB at Bat, WatchESPN, ABC News, PGA, and NFL Preseason. The lawsuit could have resulted in a substantial financial penalty for Apple since the Cupertino-based company has used the HLS video protocol in its iOS-based devices since the release of iOS 3 in 2009. As noted in a press release from Emblaze, the company was seeking approximately $511 million from Apple over its alleged infringement.

In the trial, Apple’s lawyer Mark Fowler characterized Emblaze as a failed company and said it was “trying to make up for that lack of success in the courtroom,” according to Bloomberg. Apple’s characterization of Emblaze as a failed company suggests that it was trying to paint Emblaze as a non-practicing entity, or “patent troll.”  According to PatentFreedom — an organization that tracks lawsuits filed by non-practicing entities — a non-practicing entity is a company that derives “the majority of its revenue from the licensing or enforcement of its intellectual property.”

Although it’s not clear that Emblaze currently fits this definition of a non-practicing entity, it may have qualified if it had won this lawsuit. According to Emblaze’s 2013 financial report, the company took in only $1.9 million in revenue last year. Assuming that it takes in approximately the same amount this year, a $511 million patent-infringement award would have accounted for the vast majority of the company’s revenue in 2014.

According to Law360, Apple’s lawyer told the jury that Emblaze was “a company that just sues companies.” However, Emblaze’s lawyer Martin Pavane told the jury that Emblaze wasn’t a patent troll and noted that the company had nearly $600 million in revenue in 2008, when patent-licensing negotiations would have presumably taken place, reports Law360.

While the jury found that Apple did not induce infringement, it declined to invalidate the claims covered by Emblaze’s patent. This means that while Apple is off the hook, Emblaze can still assert its patent claims against other companies. As noted by Bloomberg, Emblaze currently has a similar patent-infringement lawsuit pending against Microsoft (NASDAQ:MSFT) in the same court.

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