EFF And App Developers Alliance To Court: Don't Let Patent Troll Lodsys Avoid Apple's Attempt To Intervene In Bogus Threats

from the patent-exhaustion-is-exhausting dept

We've covered patent troll Lodsys a bunch of times. If you don't recall, it's one of many patent trolls using patents it obtained via Intellectual Ventures, to shake down tons of mobile app developers, not for anything unique that they developed, but rather because they use Apple and Google's basic in-app payment mechanisms to let people buy stuff from within the app. Lodsys has been particularly aggressive in going after smaller independent developers who likely can't afford a full defense. Lodsys has claimed that Apple and Google each have licensed the patents, and that shows the validity of the patents in question, but they ignore that those licenses came from deals with IV that covered a wide portfolio of patents, not this one in particular. Furthermore, Lodsys, really, really wants to avoid anyone pointing out that the fact that Apple and Google already licensed these patents suggests that developers who use Apple and Google's tools are covered by those licenses under the concept of patent exhaustion, which says that if a supplier licenses a patent to build it into a product, the patent holder doesn't get to double/triple/quadruple collect, by demanding licenses from everyone up and down the supply chain.

Apple, in fact, has tried to intervene in the cases that Lodsys has actually filed (against a subset of the companies to which it has sent threatening demand letters). However, it appears that Lodsys has been quite aggressive in getting companies in such cases to settle (likely by making such a settlement super cheap -- much cheaper than actually going to court) and then arguing that Apple cannot intervene since the case is actually settled.

EFF and the App Developers Alliance (disclosure: the App Developers Alliance sponsors this blog, but we've been covering Lodsys since long before they existed, and will continue to cover them going forward as is newsworthy) have now filed an amicus brief arguing that the court should deny Lodsys' attempt to keep Apple out of one of these cases, because it should be determined once and for all if app developers are immune from Lodsys' questionable threats via Apple's own license. As the brief notes, without this, app developers have significant uncertainty when receiving a threat letter -- and with it a strong incentive to just settle, even if they strongly believe they do not infringe upon the patent (or that the patent is invalid).
If this Court rules in Apple’s favor, it would also grant certainty to the millions of app developers in this country who face an open-ended threat from Lodsys. It would have the added benefit of putting litigants and potential targets in other en masse end-user suits on notice of the scope of risk they might be undertaking when they face these demands.
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Filed Under: patent exhaustion, patent trolls, patents
Companies: app developers alliance, eff, intellectual ventures, lodsys

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  1. icon
    James Burkhardt (profile), 20 Sep 2013 @ 1:37pm


    As many people have stated, it is reasonable that some entities will not want to develop the product they have patented due to initial outlay (product manufacture is expensive business), or difficulty entering a new market (a patent on a new way of designing internal combustion engines that are 30% more efficient does not make you want to start a new Automobile company, and the company he licenses to already has the engine manufacturing equipment), or a desire to focus on a separate sector (Universities are unlikely to want to go into business just about anywhere other then education and research).

    The problems are that Patent Assertion Entities have realized they don't have to hold to the normal niceties of handling patents, that PAEs realize the normal threats of counter attack don't apply, that the patent office is overworked/unable to keep up with the pace of innovation, that the patent granting system is incentivized in such a way that the patent examiners are pushed to grant even bad patents because otherwise they never 'close', and that the patent office doesn't understand many sectors allowing PAEs to get non-patentable patents or patents covering areas with prior art.

    As I discussed recently, other traits involving HOW the PAE uses its patents are needed to rule one a patent troll. These include (and any troll may have any number of these traits): suing end users rather then actual infringers (or end users covered by patent exhaustion), suing over the same patent multiple times with different shell companies, asserting overly broad patents, suing many years after the clear initial infringement so they have a bigger pot (newegg/shopping cart), suing small companies which do not have the money to fight but not bigger fish who also infringing, and asserting patents covering obvious concepts or covering an otherwise solved problem "on a computer"

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