Lodsys addresses iOS in-app purchasing patent case

Mon, May 16, 2011

Legal, News

Last week, a heretofore unknown company named Lodsys sent FedEx packages to a number of independent iOS developers informing them that their use of in-app purchasing infringed on valid patents they owned. The thrust of the letter was to open up licensing negotiations. And though not explicitly stated, it more or less implied – “Strike a licensing deal or we’ll sue.”

Now that the smoke has cleared somewhat, Lodsys has posted an official response on its blog to a few of the more common questions that have been levied at them over the past few days. Lodsys’ lawsuit naturally aroused a lot of anger, though unfortunately that has translated into hate mail and death threats directed at Lodsys CEO Mark Small.

In any event, below are some of the more pertinent portions of the Lodsys blog post.

Addressing the question of if Lodsys is trying to force Apple to take a license by proxy, Lodsys writes: “No, that’s not what’s happening.  Apple is licensed for its nameplate products and services.

So Apple has license agreements with Lodsys? We don’t think so. Seems like a murky answer.

Another question/issue addressed by Lodsys: “It’s only a few lines of code, or a button… it doesn’t make sense that it should cost additional money to do.”

Their answer:

Through the magic of software and computational power, its possible to have steps automated or abstracted down to simple implementation. But underneath the surface (easy to implement), there are some details to understand.

Dan Abelow is an independent inventor who visualized/created metaphors, documented for the world to see (in exchange for exclusivity) and created value for doing so. This ideation, as expressed in the patent, enabled a building block for others to build on and create more value. Like an app developer writing software (a copyright), he created intellectual property (in this case, a patent).

Complete and utter nonsense. Having looked at the patent in question, Abelow contributes actually nothing to the intellectual pool of computing processes. As admitted by Lodsys, Abelow’s patent (rumored to expire in August 2012) is a series of visualized metaphors describing vague processes without any technical know-how underneath. Of course, this is a problem that goes back to the patent system in our country and the voluminous number of hollow patent applications that are granted patent protection.

Interestingly, Lodsys is forthright about what its licensing deals would look like. With respect to in-app upgrades, Lodsys notes that it’s seeking 0.575% of US revenue for the period of the notice letter to when the patent expires. So if an app generates $1 million in US sales, Lodsys would want $5,750/year.

As for the involvement of Dan Abelow and/or Intellectual Ventures, Lodsys comments:

Starting in 1988, Dan Abelow invented, put in significant amounts of his time, and paid hundreds of thousands of dollars in patent filing, prosecution lawyer fees, and maintenance fees to the US Patent Office to create the patent portfolio.

Seriously? We sincerely doubt Abelow put in hundreds of thousands of dollars into patent filings and lawyer fees for this joke of a patent.

Lodsys concedes that Abelow, in 2004, did sell his patent portfolio to Intellectual Ventures who then sold those patent rights to a private ownership group which then setup “independent companies, with sufficient capital and talented staff to focus on licensing the patent rights broadly to the marketplace. Neither Dan Abelow nor Intellectual Ventures has any investment, control, or knowledge of the specific licensing activities, including who is licensed (except for what is publicly disclosed, or happened on licensing activity prior to Lodsys).”

Shady. Shady. Shady. And typical Intellectual Ventures BS.

Intellectual Ventures typically sells patent rights to aggressive patent trolls looking to make a quick buck. And note the sketch factor involved with the the private ownership groups who set up shell companies to license/litigate the patents at issue.

On the whole, it’s nice to see Lodsys respond, but if you take a look at the actual patents at issue, this is nothing more than unabashed patent trolling.



2 Comments For This Post

  1. Frank Ch. Eigler Says:

    Anyone who uses “ideation” in serious language needs to anagramize: “nae, idiot”.

  2. rpstrong Says:

    “We sincerely doubt Abelow put in hundreds of thousands of dollars into patent filings and lawyer fees for this joke of a patent.”

    Nor was that the claim – the “hundreds of thousands” were for his entire patent portfolio, not for just one joke.

eXTReMe Tracker