Apple Granted Limited Permission to Intervene in Lodsys Case

MacRumors · Apr 12, 2012

Last year, patent holding firm Lodsys took on app developers using Apple's In App Purchase system for iOS, suing a number of large and small developers over their implementation of the feature in their apps. Apple stepped forward to assist its developers by claiming that its existing licensing arrangement with Lodsys protected developers, but Lodsys has persisted in its efforts to require licensing by the developers as well.

In mid-June, Apple filed a motion to intervene in Lodsys' lawsuits against the developers, seeking to officially represent itself as both a defendant in the case and a plaintiff asserting counterclaims against Lodsys. Lodsys opposed the motion, and there has been little news on the progress of the lawsuits over the past nine months.

FOSS Patents now reports that Apple has just been granted limited permission to intervene in the case, with a judge allowing Apple to participate with regards to licensing arrangements.

In early August, Apple insisted that its motion should be granted. But for a long time, nothing happened with respect to Apple's motion. In the meantime, the judge originally presiding over the case resigned. Today, finally, Apple's motion was granted in part: "Apple is permitted to intervene in this suit, but such intervention is limited to the issues of patent exhaustion and licensing."

Judge Rodney Gilstrap concluded that Apple was entitled to intervene, and in any event, a permissive intervention (one that the court can allow in its discretion) was also an option.

While some of the defendants have already settled with Lodsys, it now appears that Apple will have an opportunity to demonstrate for the court that its licensing agreements with Lodsys preclude the patent holder from also demanding royalties from developers using the intellectual property already licensed by Apple.

Article Link: Apple Granted Limited Permission to Intervene in Lodsys Case

Small White Car · Apr 12, 2012

This should be fun.

chrono1081 · Apr 12, 2012

Please Apple Legal Team, beat the **** out of these trolls.

SPUY767 · Apr 12, 2012

Good. You can't hit up everyone in the chain for a patent, you only get one.

Fraaaa · Apr 12, 2012

Why such a obvious thing didn't occur before? Why would a judge not agree on a defendant to show evidence of agreement?

Have I missed something?

daxomni · Apr 12, 2012

chrono1081 said:
Please Apple Legal Team, beat the **** out of these trolls.

Seems like the time to "beat up the trolls" was BEFORE Apple paid them off in the first place. I guess Apple thought that this set of bullies was different from all the other bullies they've ever met.

SPUY767 said:
Good. You can't hit up everyone in the chain for a patent, you only get one.

Says who?

dwman · Apr 12, 2012

Is Lodsys really quoting Edison??

Last I checked, Lodsys didn't invent of the things they're suing over. They're just hoping for a quick payday by extorting developers.

BC2009 · Apr 12, 2012

I thought Google found prior art to completely invalidate the Lodsys patents and that a separate lawsuit was opened to invalidate them. I understand the two lawsuits happen in parallel, but anybody know the status of that?

The patent that Google found uses nearly the exact same language in the claims as the Lodsys-owned patents and the meaning of the claims were essentially the same too.

Lodsys currently makes money from Apple and others based on licensing of these patents. I'd love to see the Lodsys patents get completely invalidated so the Lodsys revenue stream from existing licensees gets completely cut off due to their greed. That would be awesome if they sued for more money and wound up with legal costs and losing their revenue stream.

kdarling · Apr 12, 2012

dwman said:
Is Lodsys really quoting Edison?? Last I checked, Lodsys didn't invent of the things they're suing over. They're just hoping for a quick payday by extorting developers.

Apple doesn't invent the apps in its store, but it gets $300 of each $1,000 mostly for being the only store allowed.

Many developers have already made a deal, since Lodsys only gets $4 royalty per $1,000. Not worth fighting over.

koruki · Apr 12, 2012

dwman said:
Is Lodsys really quoting Edison?? Last I checked, Lodsys didn't invent of the things they're suing over. They're just hoping for a quick payday by extorting developers.

They picked the worse person to quote too lol.
Tesla > Edison

camnchar · Apr 12, 2012

kdarling said:
Apple doesn't invent the apps in its store

Apple does not have a quote from Edison next to their logo.

hayesk · Apr 12, 2012

dwman said:
Is Lodsys really quoting Edison?? Last I checked, Lodsys didn't invent of the things they're suing over. They're just hoping for a quick payday by extorting developers.

Neither did Edison. He rushed to patent the works of Tesla. Seems ironically appropriate.

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Fraaaa said:
Why such a obvious thing didn't occur before? Why would a judge not agree on a defendant to show evidence of agreement?

Have I missed something?

Apple is not the defendant. App developers are. Apple wants to intervene in their cases.

narutokun · Apr 12, 2012

If the license wouldn't help Apple's developers, then WHO would it help? I mean, how would it help Apple if the developers didn't make any apps for Apple? Is Apple going to sue the license for itself? I think Lodsys may have bitten themselves on the big toe, although it might be possible they tried to shove their whole foot into their mouth.
Sometimes these companies threaten suits in the hopes that they will get payments and worry about others later... Might not be a good strategy. As they say in the chess world, "Hope is not a good strategy."

kdarling · Apr 12, 2012

camnchar said:
Apple does not have a quote from Edison next to their logo.

Apparently, neither does Lodsys these days: http://www.lodsys.com

ristlin · Apr 12, 2012

Although it's a lot easier just to work directly with Apple, there is substantial revenue to be had by Lodsys. Based on permission departments I'm familiar with, it takes about 3 people to handle about 200 requests a month. They would need at least 30 people to conceivably handle all the requests coming in.

If they are taking $4 from every $1,000 and lets go with the amount reported a few months ago that was paid out to developers, $2.5 billion (not really how much is made with in-app purchases, but we can use it as an upper limit to gauge the market), that's about $10 million dollars. We have an optimistic figure of $5 million a year.

Salary for each employee, it would cost about $40,000/year to hire them (they likely have the managers already). That's about $1.2 million in expense to run the extended business. That leaves Lodsys with about $3.8 million a year on top of what they get from Apple, minus other fees we are unaware of.

Even if the numbers are off, the basis for the added business is the same and the above example shows a healthy profit margin -- enough for them to merit going after settlements and risking court.

Josheh · Apr 12, 2012

Glad to see some news on the whole Lodsys episode. I'm curious how this will pan out in the end. I find it slightly infuriating that Lodsys is able to go around bullying developers as they have. I find it frustrating that for some they're pushed to give in because the cost of fighting would be to large. It seems a bit unfair.

I imagine for Apple the cost of licensing the patent was smaller than fighting it. Also, this patent, didn't it belong to another group when Apple first patented it? That it was part of a larger license agreement that included a lot of other patents? Either way, I feel that what Lodsys claims to hold a patent for isn't something that should be patentable.

ciociosan · Apr 12, 2012

I for one hope Apple rips them to pieces. Patent hogs like these have absolutely nothing to contribute to the industry and their very existence makes a complete mockery of intellectual property laws.

SPUY767 · Apr 12, 2012

daxomni said:
Says who?

Patent law. If Company A licences patent 101 for use in their component 18b, the patent holder of 101 is not allowed to sue company C who used component 18b in their widget 19.2 class C. If patent law worked like that, no one would ever get anything done and we'd probably live like we did in the 18th century.

backinblack875 · Apr 12, 2012

forgot about these trolls....

daxomni · Apr 12, 2012

SPUY767 said:
Patent law. If Company A licences patent 101 for use in their component 18b, the patent holder of 101 is not allowed to sue company C who used component 18b in their widget 19.2 class C. If patent law worked like that, no one would ever get anything done and we'd probably live like we did in the 18th century.

If patent law is that clear cut then why do we have this and other cases actively claiming otherwise? Seems like they would have already thrown out abusive nuisance lawsuits that had a high likelihood of failing.

kiljoy616 · Apr 12, 2012

Fraaaa said:
Why such a obvious thing didn't occur before? Why would a judge not agree on a defendant to show evidence of agreement?

Have I missed something?

Because the courts are not keeping up with the changing world? What part of government is, non.

----------

SPUY767 said:
Good. You can't hit up everyone in the chain for a patent, you only get one.

For now it would seem yes they can, mostly if they are small and don't have the capital to go for a long and expensive legal team.

Business in the new modern age, troll factory Rus.

Analog Kid · Apr 12, 2012

MacRumors said:
intervention is limited to the issues of patent exhaustion

Patent exhaustion. Glad to know there's a recognized medical diagnosis for the symptoms I'm feeling...

HiRez · Apr 12, 2012

kdarling said:
Many developers have already made a deal, since Lodsys only gets $4 royalty per $1,000. Not worth fighting over.

How about when 100 other patent holding companies see what Lodsys did getting settlements, and come after you (the developer) demanding their own cut?

kdarling · Apr 12, 2012

Josheh said:
I imagine for Apple the cost of licensing the patent was smaller than fighting it. Also, this patent, didn't it belong to another group when Apple first patented it? That it was part of a larger license agreement that included a lot of other patents?

Yes, Apple (and Google and Microsoft) licensed the patents in a huge group from a previous patent holder.

Either way, I feel that what Lodsys claims to hold a patent for isn't something that should be patentable.

A lot of people share that feeling.

SPUY767 said:
Patent law. If Company A licences patent 101 for use in their component 18b, the patent holder of 101 is not allowed to sue company C who used component 18b in their widget 19.2 class C. If patent law worked like that, no one would ever get anything done and we'd probably live like we did in the 18th century.

Right, the doctrine of patent exhaustion. Apple claims that since they licensed the patents, then their protection extends to developers using their APIs.

However, and this is Lodsys' key arguing point, Apple's developer agreement counters that idea by stating that Apple is merely a sales agent, and is not responsible for granting any patents or protection, which Apple legally deems to be the developer's problem.

So the question is, does Apple's developer contract accidentally leave developers out in the cold?

HiRez said:
How about when 100 other patent holding companies see what Lodsys did getting settlements, and come after you (the developer) demanding their own cut?

Obviously it would be bad news.

Personally, I'm against software patents in general. I think it's ridiculous to be able to patent anything that can be, and often is, re-invented by developers all around the world.

rdlink · Apr 12, 2012

kdarling said:
Apple doesn't invent the apps in its store, but it gets $300 of each $1,000 mostly for being the only store allowed.

Many developers have already made a deal, since Lodsys only gets $4 royalty per $1,000. Not worth fighting over.

Nice revisionist view. Other than the "mostly for being the only store allowed" how about:

Creating the ecosystem upon which the apps run.
Creating the tools with which the developers develop.
Providing excellent support for the developers.
Advertising for the developers.
Handling and paying for all of the transactional costs.
Continuing to develop better, faster hardware to run the developed apps.

I think that, if you asked the vast, vast majority of the developers they would tell you that they get far more value from their relationship with Apple than they ever would with Lodsys.

Apple Granted Limited Permission to Intervene in Lodsys Case

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