Apple finally comes out fighting in Lodsys patent claim

by Adam Banks on May 23, 2011

After an anxious week of speculation, Apple has responded to the demands sent by patent holder Lodsys to a number of iOS app developers.

Lodsys claimed that third-party apps featuring in-app purchases infringed its patent on “Methods and systems for gathering information from units of a commodity across a network” (US 7222078) and asked for a fee, clarified on the company’s website as 0.575% of all “US revenue”. Since one of the developers targeted, DragThing’s James Thomson, is based in Scotland, it seems Lodsys considers all App Store revenue to fall under this heading.

Lodsys acknowledged in a Q&A that Apple had already licensed the patent for its in-app purchasing system, but said this didn’t give Apple “pixie dust” to sublicense individual developers to use it – an argument that came as a shock to developers, who believed they were merely implementing technologies supplied by Apple.

Apple’s lawyers flatly disagree. In a letter to Lodsys CEO Mark Small, senior VP and general counsel Bruce Sewell says:

Under 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.

Apple then has a dig at Lodsys’ much-criticised decision to go after independent app makers:

[...] while we are not privy to all of Lodsys’s infringement contentions because you have chosen to send letters to Apple’s App Makers rather than to Apple itself, our understanding based on the letters we have reviewed is that Lodsys’s infringement allegations against Apple’s App Makers rest on Apple products and services covered by the license [...]

and goes on to argue that it, and not individual app vendors, is the party offering the disputed services to end users, so its licence covers the use of the patented technology:

Indeed, in the notice letters to App Makers that we have been privy to, Lodsys itself relies on screenshots of the App Store to purportedly meet this claim element.

We’re not patent lawyers, but the word “smackdown” springs to mind.

Of course, for good or ill, what really matters here is not so much whether Apple’s arguments will stand up in court, but the fact that Apple has stepped in, as developers had hoped, to take on the patent claim. Having chosen to fight the case, Apple is unlikely either to back down or to run out of money before Lodsys does.

iOS developers have good reason to sleep easier tonight – but this won’t be the last patent claim on ubiquitous mobile software technologies. Another patent troll, MacroSolve, has been suing iOS developers since April, and Apple hasn’t shown any willingness to get involved in those cases.

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