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Lodsys Offers Update on In App Purchase Patent Dispute, Claims Licensing Momentum

Nearly a year and a half ago, patent holding firm Lodsys threatened to file suit against App Store developers making use of Apple's In App Purchase mechanism, claiming that they were infringing upon patents held by Lodsys.

Apple stepped in to protect developers, ultimately filing a motion to intervene in the lawsuits being pursued by Lodsys against developers who were unwilling to license the patents in question. Earlier this year, Apple was granted limited permission to intervene in the case to the extent that it could seek to demonstrate that its existing license with Lodsys covers developers' usage of In App Purchase.

There has been relatively little news on the Lodsys situation over the past six months, but Lodsys today published a blog post providing a status update. According to Lodsys, the U.S. Patent and Trademark has upheld the validity of a key claim of one of the major patents in question, stymying efforts by Google to have the patent invalidated entirely.
As a part of the Inter-Parties Reexamination requested by Google, the USPTO recently issued an Office Action confirming Claim 24 of US Patent 7,222,078. This claim is particularly relevant regarding in-app purchases and free-to-paid application upgrades. In addition, we have every confidence that all claims will ultimately be confirmed through this lengthy process. In-app purchase features and free-to-paid upgrades will be a part of the litigation process that is now swiftly moving forward.
Lodsys goes on to note that Apple is continuing to press forward with its assertions that patent rights have been exhausted via Apple's license to the patents, thereby protecting developers from Lodsys' actions. Lodsys obviously contests that assertion, and a trial on the issue is scheduled for early 2013.

In a separate blog post, Lodsys notes that it has gained licensing momentum, now having reached agreements with 150 developers to license the In App Purchase patents, with over 80% of those licenses being obtained without involving litigation.
As of October 8, 2012, there are greater than 150 companies which obtained the rights to use the Lodsys Group patent portfolio, and more than 4 out of 5 of these companies have entered into licenses outside of the litigation process. These companies have realized significant savings by taking advantage of lower licensing rates.
Lodsys has taken on companies big and small with its effort, initially focusing primarily on smaller developers but later taking on heavyweights such as Rovio, EA, and Atari. Lodsys' plan has been to provide developers with notices of infringement, giving developers 21 days to obtain a license before filing suit.

It seems that most developers have elected to simply license the patents rather than incurring the expense and time commitment necessary to fight a lawsuit, but others have not backed down and with the assistance of Apple, Google, and other larger companies have been seeking to hold out against Lodsys.

Top Rated Comments

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87 months ago
“Licensing momentum” = “extorting small developers, who cannot afford to defend themselves even when they’re right, to share their livelihood with people who contributed nothing.”

A new frontier in euphemism!
Rating: 37 Votes
87 months ago
How, exactly, can the idea of in-app purchases even be patented...?
Rating: 21 Votes
87 months ago
The whole Lodsys lawsuit should be thrown out. Apple paid the royalty, developers are using something Apple already paid.
Rating: 21 Votes
87 months ago
Lodsys is the main reason our company won't rewrite our proprietary Cad software for iOS. Our attorneys aren't the only ones coming to that conclusion. The iPad's been doing great in sales, but to truly become the computer of the future, Lodsys will have to be destroyed.
Rating: 14 Votes
87 months ago
I would complain about this being a bogus patent, but I also hate in-app purchases, so it's OK. I don't want to buy a game for $1 then have to buy every @#$%ing level in the game for $2 each.

Still, the idea of this poop pile (Lodsys) making money in general doesn't sit well with me. Just looking at the Wikipedia article ( makes me wish the entire company would die of lawsuits and extreme debt. They haven't made a single product! All they do is patent troll for money! What poor excuses for human beings! They sue everyone from Apple to HP to Adidas for invalid patents.
Rating: 13 Votes
87 months ago
Cannot wait for the patent reform.
Rating: 12 Votes
87 months ago
Lodsys is a patent troll. Unsure if they've ever created anything but lawsuits.
Rating: 11 Votes
87 months ago

Quite true. Apple already paid the royalty to cover its app ecosystem. Otherwise, how on earth could SMALL indie developers ever survive (financially) to publish profitable apps in ANY app store (be it Apple's, Google's, Microsoft's, etc) if Lodsys patent insists on extorting hundreds (or thousands?) of dollars from them?

They shouldn't have paid it.

Lodsys shouldn't have gotten a single dime from anyone, anywhere, at any time. The fact that there are ****ing retards running around out there stupid enough to pay this "troll toll" is beyond pathetic. The idiots who have given Lodsys money are only validating Lodsys's behaviour as an acceptable business strategy.

This company needs to be driven into the ground. Along with every other ****ing company propagating this kind of ********. As far as I'm concerned, nothing good will ever come from giving Lodsys MORE money to "go away for a while".

Of course, the whole American patent system needs to be burned to the ground. The fact that I, as an indie developer, can sit here and genuinely come up with my own clever approach to a logical problem and be breaking the law and subject to thousands- millions of dollars in lawsuit costs and fees- is so astronomically stupid it makes me **** bricks of fear to even think about it.

Good job on stifling innovation, though. I can think of no better way to do it then to allow patent trolls like this to roam free.

Rating: 7 Votes
87 months ago

Why can't a court simply notice a company isn't doing anything but leeching of other companies, and therefore close the case entirely.
It seems like your laws have no room for discretion whatsoever, which sounds very flawed.
Rating: 7 Votes
87 months ago

Just wait until my patent on breathing gets approved. All of you are going to be screwed!

I just sent in my application to the US Patent Office for Patent #726480 "Internet Forum Trolling".

Once my patent gets approved, I will be forced ask many MacRumors regulars to immediately cease and desist, or my attorney will be sending you all a very big bill. ;)
Rating: 7 Votes

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