Apple strikes back in Lodsys in-app purchase patent fight
Apple (NASDAQ:AAPL) filed a motion to intervene in a lawsuit filed by patent holding company Lodsys, which alleges that iOS developers are violating its intellectual property rights by implementing in-app purchase options within their iPhone and iPad solutions. "Apple Inc. hereby respectfully moves to intervene as a defendant and counterclaim plaintiff in the action brought by plaintiff Lodsys, LLC against seven software application developers for allegedly infringing U.S. Patent Nos. 7,222,078 and 7,620,565," reads the Apple motion, filed Thursday in the U.S District Court for the Eastern District of Texas. "Apple seeks to intervene because it is expressly licensed to provide to the Developers products and services that embody the patents in suit, free from claims of infringement of those patents."
Lodsys, which acquired the patents in question in 2004 from inventor Dan Abelow, filed a patent infringement suit late last month targeting seven iOS programmers: Combay, IconFactory, Illusion Labs, Shovelmate, QuickOffice, Richard Shinerman and Wulven Game Studios. The suit contends the developers violated Lodsys patents related to in-app payments and data collection applied to user interactions. Lodsys is seeking 0.575 percent of U.S. revenues over the period of the notice letter to the expiration of the patent, plus applicable past usage. "So on an application that sells U.S. $1M worth of sales in a year, the licensee would have an economic exposure of $5,750 per year," Lodsys wrote on its blog.
Lodsys previously confirmed Apple, Google (NASDAQ:GOOG) and Microsoft (NASDAQ:MSFT) have all licensed its nameplate products and services, but contends that "The scope of their current licenses does NOT enable them to provide 'pixie dust' to bless another (3rd party) business applications." Apple issued a formal response to the Lodsys charges last month, stating that its existing patent license applies to its developer partners as well. In the motion filed Thursday, Apple states that the developers identified in the Lodsys suit "are individuals or small entities with far fewer resources than Apple and [...] lack the technical information, ability, and incentive to adequately protect Apple's rights under its license agreement."
Lodsys can oppose Apple's motion. "That may happen, but I believe Apple is fairly likely to be admitted as an intervenor," writes intellectual property activist Florian Mueller on his blog. "The app developers whom Lodsys sued appear to be bound by a non-disclosure agreement (which makes sense), so they can't speak out on their current relationship with Apple. While I don't have any confirmation from anyone that Apple has agreed to cover those defendants' costs and potential risks, it's hard to imagine how else this could work."
Mueller goes on to argue that platform providers like Apple, Google and other "big players who benefit so much from the patent system" must make a greater effort to assist smaller developers. "Everyone in this industry understands the importance of ecosystems and developer communities. But in order for the big players to be able to offer a 'long tail' of hundreds of thousands apps, it takes huge numbers of little guys to develop an app for this and 'an app for that.' While Apple, Google and other major players can defend themselves against patent infringement claims, their app developers cannot."
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