Tyler native wins $.5B lawsuit against Apple

Published on Monday, 9 March 2015 14:45 - Written by Roy Maynard, rmaynard@tylerpaper.com

A Tyler native has just won a half-billion dollar judgment against the most profitable company in history. Brad Caldwell, an attorney who now practices in Dallas, was born in Tyler and raised in Athens. He’s the attorney who argued a $533 million patent case against Apple, on behalf of Smartflash LLC.

“It was a big one,” Caldwell said. “But the story starts in 1999, when Patrick Racz had an idea, and he wisely put in a patent application. It was an idea for combining payment functionality and secure content.”

What he envisioned was a way for people to buy electronic content, electronically. Think iTunes — but more than 15 years ago. Racz called his system “Smartflash,” and it took off, until a dispute with a business partner led to him being left with nothing, Caldwell explained.

“He spent some time studying patent enforcement,” Caldwell said. “He actually came to Tyler and watched a patent trial. That’s when I met him. I was trying a different case against Apple.”

For its part, Apple says the Smartflash case was groundless.

“Smartflash makes no products, has no employees, creates no jobs, has no U.S. presence and is exploiting our patent system to seek royalties for technology Apple invented,” Apple said in a statement. “We refused to pay off this company for the ideas our employees spent years innovating, and unfortunately, we have been left with no choice but to take this fight up through the court system. We rely on the patent system to protect real innovation, and this case is one more example of why we feel so strongly Congress should enact meaningful patent reform.”

Caldwell disagrees. And so did a jury.

“The jury took copious notes,” he said. “They deliberated eight and a half hours.”

Caldwell said juries in East Texas, as well as the judges, are why so many patent trials take place here.

“If you’ve looked into it, there are a number of patent cases that are tried in Tyler,” he explained. “It’s really about the expertise of the judge. You can bring a patent action anywhere, but the courts in the Eastern District of Texas, 15 years ago or so, were not as busy as the courts in New York or L.A. or someplace. Over time, some companies tried patent cases here, and the judges built up some expertise. And they enacted some patent-specific rules to help the process.”

He specifically mentioned now-retired Judge Leonard Davis, who became a recognized leader on patent law.

“There are a lot of nuances to the law, and the lawyers litigating these cases like the certainty of a judge who has a lot of experience in patent cases and knows the law,” Caldwell said.

The same goes for East Texas juries, he added. A good juror doesn’t have to be an expert in the law, or even in technology. They just have to be attentive, engaged and willing to weigh the arguments.

The half-billion dollar judgment won’t take too big a bite out of Apple; the company earned $39.5 billion in profit in 2014, with $182.8 billion in sales.

Caldwell was born at Mother Francis Hospital and attended Athens High School until his sophomore year. That’s when he went to the elite Texas Academy of Mathematics and Science in Denton — what he refers to as a “magnet school for math nerds.”

He earned an electrical engineering degree from Texas A&M and a law degree from the University of Texas.