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Lodsys Publishes May 2011 Legal Response to Apple's Challenge

Over the past two years, a number of app developers have been contacted by patent holding firm Lodsys, demanding licenses for and in some cases filing suit over patents related to in-app purchasing and other functionalities. Earlier this month, Lodsys gained renewed attention when it began a new round of lawsuits targeting a number of developers large and small, including Disney and Gameloft.

At the time of Lodsys' initial effort to extract licenses from App Store developers, Apple's General Counsel Bruce Sewell sent a letter to Lodsys backing App Store developers and claiming that Apple was "undisputedly licensed" to Lodsys' patents through an arrangement that also protected app developers. Apple later requested and was given limited permission to intervene in at least some legal proceedings on behalf of targeted developers.

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Lodsys had responded to Apple's claims of protection for developers with both public blog posts and a private legal response to Apple in May 2011, and Lodsys had encouraged Apple to publish that legal response, but Apple apparently declined to do so.

In response to requests from developers seeking more information from Lodsys on the basis for its claims, Lodsys today released a redacted version of its initial legal response to Apple, dated May 31, 2011. Redactions include the removal of specific discussion of Apple's license terms with Lodsys.

The letter outlines a number of arguments as to why developers are not covered by Apple's license with Lodsys, pointing to Apple's own developer program agreements that strictly limit its relationships with developers to agency appointments rather than any broader business agreements.
First, you assert that, "[u]nder its license, Apple is entitled to offer these licensed products and services to its customers and business partners, who, in turn, have the right to use them." May 23 Letter at 1 (emphasis added). But, based on our review of [sic] publically available information, we understand that Apple expressly disclaims that App Makers are "business partners."
The response from Lodsys then proceeds to walk through six other arguments against Apple's claim that app developers are protected through Apple's license, including discussions of sublicensing, Apple's express disclaimer of any ownership interest in third-party apps, Apple's insistence that developers are solely responsible for liabilities related to their apps, and pass-through licensing issues.

Nearly two years later, the initial dispute remains unresolved, and Lodsys continues to contact developers in order to obtain licenses to its technologies with over 200 entities large and small now licensed for Lodsys' patents. Many smaller developers have found it simpler to agree to licenses representing small percentages of their revenue rather than face the prospect of lawsuits from Lodsys, but others remain in the crosshairs as Lodsys continues to stake its claims.

Top Rated Comments

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17 months ago
What a "load" of ****! But, then again, I don't mind seeing all these "freemium" apps gone! :D
Rating: 9 Votes
17 months ago
Lodsys is a patent holding company. Correct me if I'm wrong, but these exist purely to hold patents and make a business out of suing people who they claim to be in violation of their patents, whilst not necessarily being related in any way to the actual inventors or original filers of them, nor do they actually use the patents themselves to create products or deliver services?

It's things like this that clog up the justice system. There must be a backlog of patent cases just like this. The whole system needs dumping and redoing.
Rating: 8 Votes
17 months ago

You are wrong. They exist purely to hold patents and make a business out of licensing them.

Only when miscreants steal their property are they forced to sue anybody.

HTH.


They are manipulating a flaw in our judicial system for the sake of profit. They have no viable claim of ownership of the IAP system. It's a ridiculous scheme that seeks to exploit app developers.
Rating: 8 Votes
17 months ago

I have to correct you. Patent holding companies do not "make a business out of suing people". They exist to advance innovation by rewarding the inventors. They collect patents and license them to tech companies. Just like, say, music record companies or publishing companies work with musicians and writers. Then of course, some companies use inventor ideas but do not want to pay. That's where lawsuits come into picture. Apple does the same to protect their intellectual property (but on much bigger scale than any "patent troll").


I'm all for giving credit where credit is due. But the issue is that this is a ridiculously stupid patent. It is essentially a patent on clicking a button to purchase a digital commodity.

The real issue is that software patents like these get issued in the first place. They should require an actual functioning implementation and not just an idea.
Rating: 6 Votes
17 months ago

I have to correct you. Patent holding companies do not "make a business out of suing people". They exist to advance innovation by rewarding the inventors...


But their website states that the inventor of the patents does not receive any revenue from licenses. The only entities receiving revenue are the new owners and Lodsys, which are not innovating using the patents as the inventor would have, but rather making profit purely from holding them. I don't understand how that is advancing innovation.

It seems to me as though Lodsys are merely acting as middlemen in the name of profit.
Rating: 5 Votes
17 months ago

You are wrong. They exist purely to hold patents and make a business out of licensing them.

Only when miscreants steal their property are they forced to sue anybody.

HTH.


No, Lodsys is a shell company which shares an address (down to the suite number) with a number of other shell companies in a small office in Marshall, Texas. They have no one actively marketing these patents. It's just a lawsuit factory.

I would suggest you try reading one of their patents (you can find them listed in their entry in wikipedia), then justify your use of the word "miscreant".
Rating: 5 Votes
17 months ago
I happen to agree. I would prefer to pay $20 upfront for an App instead of $1 as an in app purchase. Because most freemuim apps are pay to win games or crippled productivity apps that require the in app purchases to function fully.
Rating: 4 Votes
17 months ago
If anyone is at fault, it's either Apple or no one.

Apple provides ways of integrating IAP into developer apps. Going after developers for utilizing that is like going after customers for buying counterfeit products - they're the evidence of foul play, not the actual people doing illegal things.
Rating: 4 Votes
17 months ago

Going after developers for utilizing that is like going after customers for buying counterfeit products - they're the evidence of foul play, not the actual people doing illegal things.


In the UK, the buying of counterfeit goods is technically committing a crime. It might not be right, but that's the way it is.
Rating: 4 Votes
17 months ago
So it comes down to Apple not wanting to classify developers as "business partners". That's fine. Do they pay for the developer program or own an iOS product? Cool they are now customers and are once again protected under the terms of their license agreement.

This is an apple legal team screw up and should be fixed but I have a hard time believing it's that vague.
Rating: 4 Votes

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