Lodsys – the patent holder already pressuring various iOS and Android app developers to turn over licensing fees – has now sued seven small developers in the patent-friendly Eastern District of Texas, and in truly bizarre fashion it has told targeted iOS developers that if its patent claims are wrong, it will pay them $1,000 apiece.
The lawsuit accuses the seven developers of violating two of the four patents owned by Lodsys. One patent is related to in-app payments, while the other involves collecting data from a product's user and then applying that data to additional interactions with the user. The suit alleges infringement by several iOS applications, and one Mac and one Android app.
In a blog post, Lodsys made it clear that it intends to exact licensing fees from all applications that infringe on its patents, regardless of the platform on which they run.
Apple has already licensed Lodsys patents, and has said that its licenses protect iOS app developers from infringement claims. But Lodsys says this is not the case, and that if it turns out that Apple is legally correct, it will pay $1,000 to each iOS developer it's demanding payment from. "While it is true that Apple and Lodsys have an obvious dispute about the scope of Apple’s license to the Lodsys Patents, we are willing to put our money where our mouth is and pay you something if we are wrong," the company said in its blog post.
Earlier this month, Lodsys began sending letters to certain developers, asking that they hand over about half a per cent of their US revenue as a license fee for US patent 7,222,078, and it may have sent letters demanding payment for the use of other patents as well. Then, on May 23, Apple sent a letter of its own to Lodsys and various developers, pointing out that it owns a license for all four of the Lodsys patents and claiming that license covers app developers as well as Apple itself.
Apple demanded that Lodsys rescind the letters it had send to developers. "Apple is undisputedly licensed to these (patents) and the Apple App Makers are protected by that license," reads the letter, signed by Apple senior vice president and general counsel Bruce Sewell. "There is no basis for Lodsys' infringement allegations against Apple's App Makers." Apple said.
In a series of blog posts that appeared on Monday, Lodsys disputed Apple's claims and alluded to the lawsuit it had just filed in Texas. "Lodsys chose to move its litigation timing to an earlier date than originally planned, in response to Apple’s threat, in order to preserve its legal options," the company said. It's unclear what the company means by "Apple's threat". Apple merely demanded that the company stop sending letters to iOS developers demanding payments for the patents in question.
Presumably, with its lawsuit, Lodsys feels it must lay down its own legal marker before Apple seeks a court judgment declaring Lodsys's patent infringement claims invalid.
The Lodsys lawsuit asserts not only US patent 7,222,078 – which describes "Methods and systems for gathering information from units of a commodity across a network" – but also US patent 7,620,565, which covers a "Customer-based product design module". The latter describes a system that "gathers information from the user, communicates the information to the product's vendor, and receives new pre-programmed interactions from the vendor for future interactions with the use".
With the suit, Lodsys accuses seven developers and ten applications of violating both patents: Combay of Roanoke, Texas, maker of the Mega Poker Online Texas Holdem for iPhone; Iconfactory, Inc. of Greensboro, North Carolina, maker of Twitterrific for the iPhone, the iPad, and the Mac; Illusion Labs AB of Malmö, Sweden, maker of Labyrinth for the iPhone and Android; Michael G. Karr and Shovelmate of Las Vegas, Nevada, maker of Positions for iPhone; Quickoffice, Inc. of Austin Texas, maker of Quickoffice Connect for iPhone; Richard Shinderman of Brooklyn, New York, maker of Hearts and Daggers for iPhone; and Wulven Games of Hanoi, Vietnam, maker of Shadow Era for iPhone.
Though the suit targets Android and Mac apps as well as iOS apps, Lodsys says it is intent on collecting license payments from all developers who infringe on its patent, regardless of the platform they're running on. "For those Application Developers who are also providing their Apps on other platforms such as Android, BlackBerry, Windows Phone, Symbian, Windows, Mac OS X, Facebook...etc., and/or on other app stores such as Android Market, Amazon, Ovi, Handango...etc..., then the economic responsibility still applies to those units in addition to the iOS units," Lodsys said in a blog post.
The company's surreal $1,000 offer, however, only applies to iOS developers. Apparently, this is because Apple has publicly backed the developers and because the press has focused on letters sent to iOS devs. "Lodsys offers to pay $1,000 to each entity to whom we have sent an infringement notice for infringement on the iOS platform, or that we send a notice to in the future, if it turns out that the scope of Apple’s existing license rights apply to fully license you with respect to our claim relating to your App on Apple iOS," the company said.
"The press and the blogs seem focused on the specific instances of small developers, who are only on Apple iOS, so those particular developers will be especially well served by our offer. And, in the event that Lodsys is correct, then we have a fair licensing arrangement on the table."
Of course, if a court finds that Lodsys's claims are incorrect and it forks over $1,000 to each iOS developer it pressured, those developers may have already shelled out many thousands – or many millions – analyzing the patents, paying license fees to Lodsys, or defending themselves in court. ®