Apple to Lodsys: you'll have to go through us to sue iOS devs(arstechnica.com)
arstechnica.com
Apple to Lodsys: you'll have to go through us to sue iOS devs
http://arstechnica.com/apple/news/2011/08/apple-tells-judge-intervention-against-lodsys-should-be-granted.ars
11 comments
Is the fact that Apple earns revenue from the 3rd-party developers' sales material to the case for either party?
It is relevant on at least two counts:
1. Motion to intervene: the fact that Apple earns revenues from third-party developer sales confirms that its interest in the "property" at issue in the litigation (the IV license) is potentially impaired if Lodsys is allowed to sue the developers for infringement when in fact (as Apple would claim) its patent rights were "exhausted" in this area when it (or its predecessor) granted the license to Apple. This fact, then, strengthens Apple's claim that is has a right to intervene to protect its interests.
2. On the merits: Apple will claim an unimpaired right to earn revenues from its developers owing to the strength of its license - this bolsters its substantive case that Lodsys is abusing its patent by trying to double-dip in having taken payment for the license in the first place (from Lodsys's predecessor) and then over-reaching to try to get further licensing revenues from those who should have the right to rely on Apple's license.
1. Motion to intervene: the fact that Apple earns revenues from third-party developer sales confirms that its interest in the "property" at issue in the litigation (the IV license) is potentially impaired if Lodsys is allowed to sue the developers for infringement when in fact (as Apple would claim) its patent rights were "exhausted" in this area when it (or its predecessor) granted the license to Apple. This fact, then, strengthens Apple's claim that is has a right to intervene to protect its interests.
2. On the merits: Apple will claim an unimpaired right to earn revenues from its developers owing to the strength of its license - this bolsters its substantive case that Lodsys is abusing its patent by trying to double-dip in having taken payment for the license in the first place (from Lodsys's predecessor) and then over-reaching to try to get further licensing revenues from those who should have the right to rely on Apple's license.
Bears repeating:
Lodsys acquired its four patents from former Microsoft CTO Nathan Myhrvold's Intellectual Ventures patent holding company. It turns out that Apple already has a license to those patents by virtue of an investment deal in Intellectual Ventures.
Lodsys acquired its four patents from former Microsoft CTO Nathan Myhrvold's Intellectual Ventures patent holding company. It turns out that Apple already has a license to those patents by virtue of an investment deal in Intellectual Ventures.
It also bears repeating that "Lodsys" is a shell company with a vacant office in Marshall, Texas whose sole business is licensing and litigating four patents purchased from IV under (we can only assume) a secret revenue-sharing agreement. For all intents and purposes here, Lodsys is IV.
The interesting part is that Lodsys of course knew this before acquiring the patents from Intellectual Ventures, and here's the catch...
"Even if Apple believes the patents wouldn't stand up to reexamination, it is suspected that the secret terms of the license agreement with Intellectual Ventures prohibits Apple from attempting to have the patents invalidated."
"Even if Apple believes the patents wouldn't stand up to reexamination, it is suspected that the secret terms of the license agreement with Intellectual Ventures prohibits Apple from attempting to have the patents invalidated."
Ditto with Google and Microsoft.
I hope the two-pronged defense works.
1) Apple tries to shield the iOS developers using its previous licensing agreement.
2) Someone else tries to get the patents invalidated. Several companies whose clients were targeted by Lodsys have filed preemptive lawsuits requesting declaratory judgements that Lodsys' patents are invalid, and some independent developers led by former Apple engineer Mike Lee have formed a legal defense fund to fight Lodsys and other patent trolls. Even if Apple believes the patents wouldn't stand up to reexamination, it is suspected that the secret terms of the license agreement with Intellectual Ventures prohibits Apple from attempting to have the patents invalidated.
1) Apple tries to shield the iOS developers using its previous licensing agreement.
2) Someone else tries to get the patents invalidated. Several companies whose clients were targeted by Lodsys have filed preemptive lawsuits requesting declaratory judgements that Lodsys' patents are invalid, and some independent developers led by former Apple engineer Mike Lee have formed a legal defense fund to fight Lodsys and other patent trolls. Even if Apple believes the patents wouldn't stand up to reexamination, it is suspected that the secret terms of the license agreement with Intellectual Ventures prohibits Apple from attempting to have the patents invalidated.
What Apple should do, is worse come to worse, if they can't intervene in all Lodsys cases against each individual developer, they should setup a 'trust fund', with say $2B earmarked just to cover the legal costs for all developers that get sued by Lodsys.
It might be expensive, and maybe even get abused, but the positive PR it would generate and the goodwill it would build up among third-party developers would far exceed the $2B spent (if it even gets spent) on behalf of said developers.
That would be a first and be very interesting.
It might be expensive, and maybe even get abused, but the positive PR it would generate and the goodwill it would build up among third-party developers would far exceed the $2B spent (if it even gets spent) on behalf of said developers.
That would be a first and be very interesting.
That's exactly what Lodsys would like. If Joe Startup sees a patent lawsuit and Apple is offering to pay the bills, heck yeah, just let them take care of it. In which case, all the money likely goes to a patent troll for them to scoop up more and repeat the cycle.
Wrong. Lodsys would like the little devs to pay the license fees and possibly settle after Lodsys sues them.
Having a defense fund would force Lodsys to actually do more than put up a front and go and sue each licensee... this becomes much much more costly either in time (serial cases) or money (parallel cases).
Having a defense fund would force Lodsys to actually do more than put up a front and go and sue each licensee... this becomes much much more costly either in time (serial cases) or money (parallel cases).
Exactly..I agree with r00fus.
If both Lodsys and Apple go head to head in the courts, then it really comes down to a game of attrition. Who has the most cash to pay the attorneys. Even if Lodsys is run by attorneys, and the principals work free, they still have to pay everyone else.
Lodsys can't outpay Apple. They just don't have the cash. So it should be a deterrent.
If both Lodsys and Apple go head to head in the courts, then it really comes down to a game of attrition. Who has the most cash to pay the attorneys. Even if Lodsys is run by attorneys, and the principals work free, they still have to pay everyone else.
Lodsys can't outpay Apple. They just don't have the cash. So it should be a deterrent.
I'd really like to see the corporate veil pierced and individuals civilly or criminally responsible for abuse of the patent system. (this would probably require some modifications to the law, either by congress or by a seriously activist court, but the end result would totally be worth it)
Why is this an abuse? They patented something and are suing people they think are infringing on their patents.
The problem is the concept of software patents in general, not the various ways of "enforcing" them.
The problem is the concept of software patents in general, not the various ways of "enforcing" them.
> Why is this an abuse?
From Wiktionary:
abuse: (n.) Improper treatment or usage; application to a wrong or bad purpose; misuse; perversion.
In my understanding, the intended purpose of the patent system is to protect and foster innovation. Clearly, the patent system is being misused for a very different purpose, which many would call bad or wrong. As such, this perversion of the patent system qualifies as abuse to those who agree.
The patent system itself being "the problem", as you say, in no way makes this abuse of it less of a problem.
If you don't believe that this is abuse, it might be because of your second statement:
> They patented something and are suing people they think are infringing on their patents.
Lodsys did not patent this. At best, Intellectual Ventures patented it, and Lodsys "bought" the patents, probably through some more nefarious means, with the sole intent of profiting through litigation. No innovation there.
From Wiktionary:
abuse: (n.) Improper treatment or usage; application to a wrong or bad purpose; misuse; perversion.
In my understanding, the intended purpose of the patent system is to protect and foster innovation. Clearly, the patent system is being misused for a very different purpose, which many would call bad or wrong. As such, this perversion of the patent system qualifies as abuse to those who agree.
The patent system itself being "the problem", as you say, in no way makes this abuse of it less of a problem.
If you don't believe that this is abuse, it might be because of your second statement:
> They patented something and are suing people they think are infringing on their patents.
Lodsys did not patent this. At best, Intellectual Ventures patented it, and Lodsys "bought" the patents, probably through some more nefarious means, with the sole intent of profiting through litigation. No innovation there.
Lodsys did not patent this. At best, Intellectual Ventures patented it, and Lodsys "bought" the patents, probably through some more nefarious means, with the sole intent of profiting through litigation. No innovation there.
I see this on some level, but on some other level, it makes sense to be able to transfer property. You invented something. The government gave you exclusive rights to sue anyone who did anything remotely resembling what you invented. You decided the best way to profit from your invention was to sell this right to someone else.
Clearly, this is fine. The problem is not that you cashed out on your work. The problem is that the government shouldn't have given you the right to sue other people for doing something similar to what you do.
We can't blame Lodsys for exploiting the holes in the patent system. For that, we have to blame the system itself.
The right way to monetize innovative software-related ideas is to write innovative software, which is protected by copyright. But the law says differently -- just coming up with an idea is more valuable than coming up with a product that uses that idea to be innovative. And there's your problem.
I see this on some level, but on some other level, it makes sense to be able to transfer property. You invented something. The government gave you exclusive rights to sue anyone who did anything remotely resembling what you invented. You decided the best way to profit from your invention was to sell this right to someone else.
Clearly, this is fine. The problem is not that you cashed out on your work. The problem is that the government shouldn't have given you the right to sue other people for doing something similar to what you do.
We can't blame Lodsys for exploiting the holes in the patent system. For that, we have to blame the system itself.
The right way to monetize innovative software-related ideas is to write innovative software, which is protected by copyright. But the law says differently -- just coming up with an idea is more valuable than coming up with a product that uses that idea to be innovative. And there's your problem.
We can't blame Lodsys for exploiting the holes in the patent system. For that, we have to blame the system itself.
Yes, we can. We can blame Lodsys, IV, et. al. for behaving legally but unethically and/or counterproductively to society, while also blaming the system itself.
Otherwise, this statement is roughly similar to saying that you can't blame bullies for beating up nerds; it's the nerds' fault for being weak, and the playground's fault for not having nerd protection.
Yes, we can. We can blame Lodsys, IV, et. al. for behaving legally but unethically and/or counterproductively to society, while also blaming the system itself.
Otherwise, this statement is roughly similar to saying that you can't blame bullies for beating up nerds; it's the nerds' fault for being weak, and the playground's fault for not having nerd protection.
> We can't blame Lodsys for exploiting the holes in
> the patent system. For that, we have to blame the
> system itself.
> So long as something is legal, it is moral.
> We can't blame that serial murder just because
> he found a way to kill people that is perfectly
> legal!Your moral framework is questionable at best.
Lodsys did not patent this. At best, Intellectual Ventures patented it, and Lodsys "bought" the patents, probably through some more nefarious means, with the sole intent of profiting through litigation. No innovation there.
Devil's advocate: Whoever first thought of the tech behind these patents (i.e the people who filed them) may have been motivated by the expectation that even if they cannot figure out a way to directly profit from their ingenuity (by licensing to developers, for example) a patent is valuable because it can be sold to companies who can better manage their use and licensing, part of which may require litigation in order to enforce the rights bestowed by the patent.
In other words, making patents more fungible makes patenting more attractive to innovators.
Devil's advocate: Whoever first thought of the tech behind these patents (i.e the people who filed them) may have been motivated by the expectation that even if they cannot figure out a way to directly profit from their ingenuity (by licensing to developers, for example) a patent is valuable because it can be sold to companies who can better manage their use and licensing, part of which may require litigation in order to enforce the rights bestowed by the patent.
In other words, making patents more fungible makes patenting more attractive to innovators.
>"Lodsys did not patent this. At best, Intellectual Ventures patented it, and Lodsys "bought" the patents, probably through some more nefarious means, with the sole intent of profiting through litigation. No innovation there."
Apple didn't patent it either, "bought" a license, and sought to profit from that license. There is no more innovation there than with Lodsys.
Apple didn't patent it either, "bought" a license, and sought to profit from that license. There is no more innovation there than with Lodsys.
Apple has a licensing arrangement with Intellectual Ventures to keep them from being sued by the patent trolls that Intellectual Ventures sells patents to. It's freakishly unlikely that anyone at Apple got the idea for in-app purchases from this patent, never mind that the patent itself is likely invalid for any number of reasons.
This isn't about who innovated what. You're watching a protection racket in action.
This isn't about who innovated what. You're watching a protection racket in action.
> The problem is the concept of software patents in general, not the various ways of "enforcing" them.
Absolutely not. The concept of patents, as applied to software or anything else, is a valuable aid to innovation. The implementation of that concept is what is flawed.
What has made it a thorn in the side of the software industry in the abuse of companies big & small, legitimate (Amazon's single click checkout) or illegitimate (Lodsys). Without abuse of the system, it's a great thing. Problem is we don't live in a perfect world and there is such a massive gray area, which makes it a very difficult problem to solve.
> They patented something....
False. They established a shell company in TX and bought 4 patents off the biggest patent troll company out there with the sole intent of suing whoever they could.
Absolutely not. The concept of patents, as applied to software or anything else, is a valuable aid to innovation. The implementation of that concept is what is flawed.
What has made it a thorn in the side of the software industry in the abuse of companies big & small, legitimate (Amazon's single click checkout) or illegitimate (Lodsys). Without abuse of the system, it's a great thing. Problem is we don't live in a perfect world and there is such a massive gray area, which makes it a very difficult problem to solve.
> They patented something....
False. They established a shell company in TX and bought 4 patents off the biggest patent troll company out there with the sole intent of suing whoever they could.
I complain about apple a lot - even though I keep buying their stuff, but this is definitely a case of apple doing the right thing for its developers.
I applaud them as well. It's better than just sitting on the sidelines (see: Google & Microsoft) while their "partners" get sued.
But, let's not forget there is a lot for Apple to lose in this if Lodsys is victorious. If developing iOS apps becomes a patent minefield, AAPL stands to lose a lot of money.
But, let's not forget there is a lot for Apple to lose in this if Lodsys is victorious. If developing iOS apps becomes a patent minefield, AAPL stands to lose a lot of money.
I think that Apple probably has more of a leg to stand on when it comes to intervening because of the way their app marketplace is setup.
The article mentions that Google and others (Microsoft) got in on the same financing deal granting them similar licenses. RIM licensed the same portfolio this past March.
Anyone know why Google/MS/RIM haven't filed to intervene as well?
Edit:
List of investors: http://www.patentlyo.com/patent/2011/05/intellectual-venture...
RIM: http://www.intellectualventures.com/newsroom/pressreleases/1...
Anyone know why Google/MS/RIM haven't filed to intervene as well?
Edit:
List of investors: http://www.patentlyo.com/patent/2011/05/intellectual-venture...
RIM: http://www.intellectualventures.com/newsroom/pressreleases/1...
>Anyone know why Google/MS/RIM haven't filed to intervene as well?
Perhaps because, in terms of dollars spent by users, the iOS market is by far the biggest ongoing concern.
I'm sure that, for RIM at least, the cost-benefit analysis is pretty prohibitive.
Perhaps because, in terms of dollars spent by users, the iOS market is by far the biggest ongoing concern.
I'm sure that, for RIM at least, the cost-benefit analysis is pretty prohibitive.
I'm guessing they're hoping Apple will bear the burden and pin down Lodsys.
Even if it weren't a term of their protection agreement with IV, it's not so surprising Apple isn't questioning the validity of the patents. Apple already pays for it, so if they get their protection extended to iOS developers, invalidating the patents would only be bad for Apple.
It's good to see apple stand up for their developers, but does the license Apple has apply to the developers? The developers are, after all, the ones technically infringing on the patents.
From the article: This defense is known as "exhaustion" — the third parties in question should be covered by the original license, so patent owners can't claim infringement by those third parties.
The company asserts that developers are its business partners, and therefore Apple has a material interest in protecting those partners from being sued over technology that it has previously licensed. The heart of the dispute hinges on the licensing terms Apple received from Intellectual Ventures, though the details of those terms apparently cannot be publicly revealed.
Apple believes the licence it has protects its partners. Without seeing the terms of the licence it is impossible to say if this is the case, but it is certainly possible.
The company asserts that developers are its business partners, and therefore Apple has a material interest in protecting those partners from being sued over technology that it has previously licensed. The heart of the dispute hinges on the licensing terms Apple received from Intellectual Ventures, though the details of those terms apparently cannot be publicly revealed.
Apple believes the licence it has protects its partners. Without seeing the terms of the licence it is impossible to say if this is the case, but it is certainly possible.
> Apple believes the licence it has protects its partners. Without seeing the terms of the licence it is impossible to say if this is the case, but it is certainly possible.
And it certainly seems silly that Apple would not have sought those terms in its license. Of course, patent licenses don't often appeal to common sense, but the one thing Apple has is foresight.
And it certainly seems silly that Apple would not have sought those terms in its license. Of course, patent licenses don't often appeal to common sense, but the one thing Apple has is foresight.
I'm not inclined to believe in any charitable intent with Apple's move. Apple's target focus has traditionally been about the users (user experience, user interface etc.) and seldom about developers.
Apple needs this. Else it will potentially lose its 30% cut off all in-app purchases.
Apple needs this. Else it will potentially lose its 30% cut off all in-app purchases.
I think Apple should defend developers. Particularly because they were the one's who enabled the feature and made the API accessible to developers. And considering how closed Apple is about iOS and some of their natives APIs, allowing this particularly feature to be released is a big deal.
I completely agree, but I'm not sure if that would hold up in court. I would assume we would need more information about the license to know for sure.
> I would assume we would need more information about the license to know for sure.
Not necessarily. There are limitations on patents that prevent you as a patent holder from successfully suing the customers who buy widgets from me for patent infringement if I have a valid license for that patent from you.
In this case, since the Intellectual Ventures ("Lodsys") patents cover both client and server mechanisms, and Apple owns and makes the server side processes, and Apple has a valid license, the argument is that the same principle applies.
Not necessarily. There are limitations on patents that prevent you as a patent holder from successfully suing the customers who buy widgets from me for patent infringement if I have a valid license for that patent from you.
In this case, since the Intellectual Ventures ("Lodsys") patents cover both client and server mechanisms, and Apple owns and makes the server side processes, and Apple has a valid license, the argument is that the same principle applies.
Are they though? The app I write that you download from the store doesn't infringe the patent. Its only when its combined with the OS libraries and executed by the user that a system that infringes the patent exists.
Okay, as (nearly) the most valuable company in the world, why don't they avoid all the legal maneuvering and resolve the problem with an acquisition?
That would probably be on the table if Lodsys weren't just a flunky for a massive consortium of patent trolls.
I would not be surprised if this is just a proxy attack from google and apple's enemies. Main suspect: Microsoft.
Second suspect: Nokia
Ten years ago called and wants its anti-Microsoft conspiracies back.
1. Under Rule 24(a)(2) of the Federal Rules of Civil Procedure, the court must grant Apple the right to intervene as of right if Apple can show: (1) that it has filed a timely motion to do so; (2) that it claims an "interest" in "property" that is the subject of the action; (3) that its ability to protect its interest in that property may as a practical matter be impaired or impeded if the legal action is allowed to be disposed of without its participation; and (4) that existing parties cannot adequately represent that interest.
2. Consistent with this rule, Apple's legal argument boils down to the idea that it has a license from IV to protect, and rights under that license, all of which will be impaired or impeded if Lodsys is allowed to pursue infringement claims against developers who develop apps for the environment to which Apple's license applies. Hence, Apple must be allowed to step in to defend the integrity of its license and to argue, based on that license, that Lodsys is barred by the doctrine of "patent exhaustion" from pursuing claims against the developers.
3. Apple thus argues that it needs to be in the case to protect its own interests, not those of the developers. Now, de facto, this might amount to the same thing since Apple does not want to face a revolt among its developers. But there is irony here in that Lodsys is arguing, as one of its major points on why Apple should not be allowed to intervene, that Apple has no obligation legally to hold the developers harmless (i.e., based on Apple's agreements, the developers are on their own). In seeking to intervene to argue the patent exhaustion doctrine, then, Apple is saying it will protect its license rights primarily and developers only incidentally and, again, without undertaking any legal obligation to indemnify any developer.
4. All that said, "patent exhaustion" is a potent defense, the effect of which (if upheld) would be invalidate the patent for misuse. "Misuse" here lies in the idea of extending the exclusive rights afforded by the patent grant beyond their legitimate scope. Apple's ability to prove misuse, though, is by no means easy. To show misuse, it will essentially have to show that the IV license was intended to cover separate products (apps) that did not even exist when the license was granted and that do not constitute an integral part of the Apple product when sold. This will be tricky at best and obviously will take a party of Apple's sophistication and wherewithal to marshal the arguments and factual development effectively. That, of course, is why Lodsys does not want Apple in the case. It would much prefer to bully smaller and less sophisticated parties because that is how patent bullying works best.