Apple licensed US Patent #772,078 from original owner Intellectual Ventures to allow for in-app purchases of iOS apps. The patent, now owned by Lodsys, covers "Methods and systems for gathering information from units of a commodity across a network." Lodsys started suing iOS developers for patent infringement and Apple filed a motion to intervene in patent infringement lawsuits in 2011.
Patent trolls -- also known as Patent Assertion Entities ("PAEs") -- are "firms with a business model based primarily on purchasing patents and then attempting to generate revenue by asserting the intellectual property against persons who are already practicing the patented technologies," according to the FTC. According to Joe Mullin from Ars Technica, "Lodsys became one of the most-scorned patent holders in 2011, by making seemingly small cash demands (just 0.575 percent of your revenue, please!) against small app makers, who it said were infringing its patents that cover in-app purchasing and upgrades."
Ars Technica further states that, "the East Texas judge [US District Judge Rodney Gilstrap] overseeing Lodsys' systematic patent attack on app developers has refused to even consider Apple's motion." This means that Lodsys is now free to "threaten developers for months, and perhaps even years, to come," according to Mullin.
An amicus brief, which is loosely an offer to assist in understanding an issue being handled by a court by parties with a strong interest in the issue (but not part of the court action) was filed by the App Developers Alliance and the Electronic Frontier Foundation. The brief states: "Lodsys's pattern of sending out demand letters, suing a seemingly random sampling of app developers and then settling with those app developers, promises that those developers' claims of a right to use the technology in question will never be heard. The resulting uncertainty leaves developers in limbo. In fact, there have been reports that app developers are indeed pulling apps out of the U.S. markets entirely. Charles Arthur, App Developers Withdraw from US as Patent Fears Reach 'Tipping Point', The Guardian (July 15, 2011)."
Mullin recounts some of the pending suits and companies involved, and provides more detail on how those companies are handling the cases. "Apple's argument that the Lodsys patents are already paid for could have been a clean and effective way to shut down much of the Lodsys patent campaign." It looks like that isn't going to happen anytime soon.
Related Stories
FTC publishes a long list of questions it wants to ask "patent trolls", Ars Technica, 9/27/13.
FTC Seeks to Examine Patent Assertion Entities and Their Impact on Innovation, Competition, FTC, 9/27/13.
Lodsys offers to settle patent dispute with fortunate developer, TUAW, 8/8/13.
Apple allowed to intervene in Lodsys patent case, TUAW, 4/13/12.
Lodsys now going after apps with More Apps buttons, TUAW, 7/13/11.
Apple files motion to intervene in Lodsys suit, TUAW, 6/10/11.
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via TUAW - The Unofficial Apple Weblog http://www.tuaw.com/2013/09/30/judge-tosses-out-apples-motion-regarding-lodsys/
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