Apple has been ordered to pay US$532.9 million (A$675 million) after a federal jury in Texas found its iTunes software infringed three patents owned by patent licensing firm Smartflash LLC.
Though Smartflash had been asking for US$852 million in damages, Tuesday night's verdict was still a blow to Apple.
The jury, which deliberated for eight hours, determined Apple had not only used Smartflash's patents without permission, but did so willfully.
Apple, which said it would appeal, said the outcome was another reason reform was needed in the patent system to curb litigation by companies that don't make products themselves.
"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," Apple said in a statement.
Smartflash sued Apple in May 2013, alleging its iTunes software infringed its patents related to accessing and storing downloaded songs, videos and games.
"Smartflash is very happy with the jury's verdict, which recognises Apple's longstanding willful infringement," Brad Caldwell, a lawyer for Smartflash, said in an email.
The trial was held in Tyler, which over the past decade has become a focus for patent litigation.
Smartflash's registered office is also in Tyler.
It was also in the Tyler federal court that a jury in 2012 ordered Apple to pay US$368 million to VirnetX for patent infringement. A federal appeals court later threw out that damages figure, saying it was wrongly calculated.
Apple tried to avoid a trial by having the lawsuit thrown out. But US District Judge Rodney Gilstrap, who presided over the case, ruled earlier this month that Smartflash'stechnology was not too basic to deserve the patents.
Apple had asked the jury to find Smartflash's patents invalid because previously patented inventions covered the same technology.
Smartflash's suit said that around 2000, the co-inventor of its patents, Patrick Racz, had met with executives of what is now European SIM card maker Gemalto SA, including Augustin Farrugia, who is now a senior director at Apple.
Smartflash has also filed patent infringement lawsuits against Samsung, HTC and Google.