Apple Says Lodsys Has No Case Against Developers; Will Defend Them Against Suits

from the patent-exhaustion? dept

Tue, May 24th 2011 6:06am — Mike Masnick

With Lodsys providing an excellent case study in the patent system run amuck with its plan to sue a bunch of independent iOS developers for offering Apple's official in-app payment offering, one of the big questions was how Apple would respond. Lodsys insisted that Apple had a license, but that it only applied to Apple, not to any Apple developers. Apple has now publicly disagreed and claimed that it would defend developers against any such claims.

I was wondering if Apple would even contest the validity of the Lodsys patent or whether the in-app payment offerings were infringing, but the company didn't even bother. Instead, it notes that Apple has indeed licensed the patent, and any of the developers using the in-app payment solutions aren't doing their own thing, but are using the already licensed Apple technology, and under the famous Supreme Court ruling in the Quanta case, if a patent holder licenses a product to one player in the supply chain, it can't then go after others down the stream. While some are claiming that this will still involve a fight between Apple and Lodsys over the exact terms of Apple's license, I don't actually think that's the case. Apple's not arguing the nature of the license, but is claiming that since these developers are using Apple technology, the patent has been exhausted in this case. In fact, it seems like a pretty direct parallel to the Quanta case, which is going to make it difficult for Lodsys to get very far.

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Filed Under: in-app payments, patent exhaustion, patent trolls, patents
Companies: apple, lodsys

10 Comments

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Mike, 24 May 2011 @ 6:38am

I don't think the letter goes as far as you suggest
With all due respect, this letter does not go so far as to say it will "defend" the developers, but that might be the practical result.

The ONLY thing this says is that "Apple... is fully prepared to defend APPLE'S license rights."

Nowhere does it say that if Lodsys sues an app developer that Apple will 1. fund the defense or 2. indemnify the developer against damages.
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Anonymous Coward, 24 May 2011 @ 6:57am

I think this is a great example of how patents can negatively affect innovation. The two parties here are Lodsys and app developers. The massive innovation and wealth creation is being done by the developers. What's Lodsys' contribution here? Does anybody actually believe their participation in this market is good for anybody? Clearly Lodsys is just a parasite who won the patent lottery.
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DH's Love Child (profile), 24 May 2011 @ 7:31am

Is it possible
That these developers are also using this patented process (or whatever the hell it is) on platforms other than iOS?

(just playing devil's advocate)
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Anonymous Coward, 24 May 2011 @ 7:34am

Re: I don't think the letter goes as far as you suggest
Let's just hope apple realizes that its continuing dominance in the market is related to its services (app store, itunes) and not *just* hardware. It seems in apple's own best interest to defend those who earn a great deal of money for them. This is also a competitive advantage. I like openness philosophy of android, but google seems less "on the hook" to defend lawsuits like this against developers because of that openess. If apple handles this correctly it will go along way towards developer loyalty and thus quality apps.
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AdamR (profile), 24 May 2011 @ 8:07am

The funny thing is that Apple is the one who triggered all this by forcing everyone to their in app purchasing scheme so they can pocket the 30% fee. I really wonder what all the big periodicals are thinking since they took apple's bait and announced their products for the I-pad. I thought Apple was going to to come out with the guns firing, instead we got this mildly passive response. I wondering if Lodsys end game is to get Apple to fork over a little cash at them to go away and Apple to look like a knight in shinning armor. Then Lodsys can turn around and squeeze Google and Microsoft.
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Andrew F (profile), 24 May 2011 @ 4:58pm

Patent Exhaustion and First Sale
There's actually an interesting twist here I think.

The Quanta case only says that if you license someone to SELL a product that embodies a patent, then any downstream users of that product don't need a license as well.

The catch is the "sell". If I license the technology, but you choose to sublicense or relicense the technology rather than sell a product, then the patent hasn't been exhausted. This is similar to the first sale doctrine in copyright law, and it's why software companies always insist on "licensing" technology to you rather than just sell it.

So in order for a patent exhaustion claim to move forward, Apple is saying that it sold, not licensed, its SDK to its developers.

Why is that interesting? Well, it basically means developers can now IGNORE all of Apple's licensing terms without violating copyright law. They're the owners of the software, not licensees! They can resell the software, develop apps for jailbroken iPhones, etc.

Note that Apple can still bring a breach of contract claim against the developer, because this is separate from the copyright issue. But Apple cannot bring a breach of contract against any random person who manages to get a hold of an SDK (e.g. off eBay) but did not agree to anything with Apple. In the past, Apple might have brought a copyright claim, but in conceding that they've actually sold something, they can't do so anymore.
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Mr Big Content, 25 May 2011 @ 5:05am

Intellectual Property ⊆ Property
Apple is trying to treat Lodsys� Intellectual Property as something you can just buy and sell. It�s not. Intellectual property is property, after all: just because you buy it, doesn�t mean you can automatically give others the right to use it.

Just remember: just because you can buy and sell it, doesn�t mean it�s property.
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RJ Castle, 28 May 2011 @ 3:41am

LodSys Attacks David
Hi...
Any lawyers here?

We've just received the same letter as Apple and their developers.
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Alatar, 29 May 2011 @ 11:05am

Oh yeah, Apple is against patents now
After suing everyone for infringement on stupid patents (like "slide to unlock" used against HTC) and defending the patent system, they now feel the need to fight that patent. Why dont they just pay licenses for every single IOS developer? That would be the american way of '"encouraging innovation"
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patent litigation, 30 May 2011 @ 4:51pm

coming out swinging
Apple pretty much had no choice except to come out swinging on behalf of its developers. The company's been under so much pressure and scrutiny about this that, had it not defended the developers, its image would have suffered terribly, perhaps irreparably. That said, however, I'm glad Apple finally did step up to the plate. Hopefully, Apple's actions will make Lodsys and other trolls think twice about trying to take out one-man app shops and other "easy targets" via patent litigation -- especially those that have big guns on their side.
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