Lodsys Continues Demanding Cut Of Smartphone Apps; Developers Hit Back In Court

from the innovation? dept

The story of Lodsys is, by now, quite an infamous one in smartphone app development circles. The “company” (and I use that term loosely) owns a few patents, which it basically claims covers any iPhone app that involves in-app payments:

  • 5,999,908: Customer-based product design module
  • 7,133,834: Product value information interchange server
  • 7,222,078: Methods and systems for gathering information from units of a commodity across a network
  • 7,620,565: Customer-based product design module

This is despite the fact that Apple offers in-app payments as a feature of its platform, and Apple, in fact, holds a license to the patent in question. Of course, Lodsys and its supporters argue that Apple’s “license” only applies to Apple and that it’s proof that the patent is valid. That’s not accurate however. The patents Lodsys holds were spun out of Intellectual Ventures, so it’s most likely that Apple’s “license” to them comes from the fact that it’s one of the many large tech companies who have paid off IV to be protected from such patents. Apple has said that it will defend iPhone developers in court if they take on Lodsys, but it’s still an expensive proposition, and even some of the most principled app developers are realizing that it’s cheaper to settle than to fight.

This is, of course, exactly what Lodsys (and many other patent trolls) rely on. The patent system today is such that if you get sued, you’re almost guaranteed to have to spend at least $1 million defending yourself in court. This is not fair. This is not reasonable. But it’s a key element in our broken system, and the trolls exploit it as much as they possibly can.

Thankfully, some companies are trying to fight back. Despite Apple’s promises to fight on behalf of its developers, Lodsys continues to both threaten and sue, including going after some big companies, like Dell, Rosetta Stone and Overstock. Of course, one reason why Lodsys wants to keep going is that at least one of its patents expires in a few months — and it probably wants to squeeze as much out of it as possible. As the article linked here by Jeff Roberts highlights, a Seattle app developer, A Thinking Ape, has decided to jump ahead of the line by filing for a declaratory judgment against Lodsys. Lodsys’s initial threat letter and A Thinking Ape’s filing are embedded below. The filing includes details of many other declaratory judgment filings against Lodsys and argues that the patents are both invalid and that A Thinking Ape doesn’t infringe them anyway. It certainly would be nice to see Lodsys smacked around in court a bit, but Lodsys and its secretive “owners” are still likely making out like bandits by effectively taxing tons of app makers.

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Companies: a thinking ape, apple, dell, lodsys, overstock, rosetta stone

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Comments on “Lodsys Continues Demanding Cut Of Smartphone Apps; Developers Hit Back In Court”

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It is humorous (or galling) to keep this lawsuit in mind when you watch the video interviews of Nathan Myhrvold at “All things D” on tech news sites this week where he defends IV’s approach to patent licensing.

He repeats the meme that ideas should be protected, even though patents are specifically supposed to NOT be for ideas, but rather implementations.

Mr Big Contentsays:

An Important Analogy

Imagine your a landowner. You own some scenic wild country. Apple wants to run bus tours through your scenery. So you sell Apple a license to bring buses through your property.

Then you discover that Apple wants to put people on those buses to come and see the scenery. Of course your going to demand payment from those tourists, right? They can’t just freeload on the license you gave Apple, which was specifically and only for the buses, right?

Simple logic, really.


The judges in the Lodsys cases need to follow the lead of the judge in the Kelora case, another troll that sued online retailers for an in-site search patent. In that case, the judge threw out the case due to the obviousness of the patent and ordered Kelora to pay the legal costs of the companies it sued. The Kelora patent was less obvious than the patents owned by Lodsys and probably even had less prior art.

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