Lodsys and app patent disputes

Imagine that you are a software developer, you hire programmers to produce real applications and offer them to the public. You produce innovative products, engage with customers, and sell quality applications. The software market is competitive, but you are doing relatively well. Then one day a letter arrives out of the blue claiming that you are infringing a patent, and the person making the claim is not even a developer, it is a shell company that does nothing but file lawsuits. You would probably feel cheated by the system to say the least. Angry for sure.

This is precisely what happened to various iPhone app developers last week as they started receiving threatening letters from patent troll Lodsys LLC, accusing them of patent infringement, and asking for licensing fees. The letters have created quite a stir in the app-development community, as the threat comes from the use of a functionality built into Apple’s iOS system which allows customers to purchase the programs inside the app itself.

Lodsys has ownership of four “inventions”, which it claims cover things like in-app purchase. These are U.S. patents 5,999,908; 7,133,834; 7,222,078; and 7,620,565. As far as generic software patents go, these are rather typical. Take 5,999,908, which protects a customer-based product design module. As far as I can see, this is an incredibly generic patent that protects any sort of interaction between a service provider and a customer within any system that contains a microprocessor. The main claim is that there is a two-way interacting system between the provider’s computer, and the customer’s computer. I kid you not. It seems like nobody had thought of this before 1997! I wonder how we managed before.

There is no indication yet which of the patent Lodsys claims is infringed by the app developers, but my money is on 7,620,565, which protects a customer-based product design module. The abstracts explains that this is:

“A network, including a product sub-system that interacts with a user, 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 user. The sub-system is in or attached to a product. Further components include a data processing system for constructing and downloading pre-programmed interactions to the product sub-system; a communications sub-system for transmitting the data from the product sub-system to the vendor’s computer; a communications apparatus for reading the product sub-system’s data, transmitting it to the vendor’s computer, and downloading new pre-programmed interactions to the product sub-system; a data processing system residing in the product sub-system for conducting interactions with a user; and a data processing system residing in the vendor’s computer for analyzing and reporting information gathered from users.”

So, this patent covers application update mechanisms, not just in-app purchasing. Needless to say, the potential for litigation is huge.

So who are these patent trolls anyway? Lodsys seems to be nothing more than your average patent troll outfit, you know the type: they have never produced anything at all, never written a single line of code, and they simply live from licensing their patents. Even more outrageously, there is the fact that in their welcome page, they have posted quotes from Thomas Alba Edison and Albert Einstein in one of the most odious arguments from authority that I have seen in the patent field. It is almost as if they know that they are not inventors, that they produce nothing in the field, that they are simply leeches to the system, but they hide behind great names as if somehow a small quote will validate their business model. “Look, we must be right, Edison and Einstein said so!” The fact that they have managed to extort licence fees from Microsoft, Apple and Google does nothing to validate their dubious practices. By the way, if you want a free chuckle, take a look at the inventor’s page (anyone who names what they do “Computing v2” has some serious ego issues, but I digress).

So what is likely to happen? This is extremely serious issue. If Lodsys was your generic patent troll, then we would not be hearing so much from them other than in humble pages such as these. However, what is taking place is an escalation in the patent wars. In the past, patent trolls were content to go after the big players. Microsoft, Apple and Google are used to these lawsuits, and an unholy patent troll market has arisen as a result, asking and obtaining fees from these companies. But Lodsys is attacking small and medium enterprises, companies who are not directly infringing, but who are interacting with an application programming interface (API) that allows them to have access to some sort of shared features; it is claimed that the API is the one infringing. Even if the API developer has paid licensing fees, Lodsys claims that the mere interaction with the API allows them to charge fees from developers.

By attacking these types of developers, Lodsys is opening the door for other patent trolls to any small company which produces software that interacts with a larger market via an intermediary API. Think Apple´s iTunes App Store, Google´s Marketplace, and Blackberry´s App World. But the problem does not stop there, these patents could be used to attack any type of centralised developer marketplace, I am thinking of sites like Firefox´s Addons site, or even Drupal’s Download pages.

What’s in store for the future? Apple are reportedly looking into the matter at the moment after developers have staged a boycott of its API to exert some pressure. I believe that Apple will have to try to fight the patents, or at least organise some sort of defend fund. Otherwise, important developers may simply abandon the app store and move to Android. Having said that, Lodsys is hinting that it might go after Google and Microsoft next.

For the longer term, this is further evidence to me that being a developer in the U.S. under the current patent climate may not be worth it. App developers elsewhere do not have to face such a toxic legal environment, which might spell the end of small and medium software development in the United States.

For those of you thinking of migrating, may I suggest Costa Rica? Lovely weather and decent beer.

Comments 4

  1. Gee, thanks for linking to the GigaOm piece, which simply links directly to the piece I wrote in its first post, in quoting that Apple legal is looking at this. Yes, blogging is about linking, but sometimes it's about finding the original information, not just "the last page I looked at before I began writing".

    Also: the inventor of the patent (however unworthy we may think it) isn't the person who runs Lodsys.

    You also didn't mention MacroSolve, which is also suing devs, and which actually does have staff – well, they hired a programmer once.

    …you know, we've actually written about this a bit..

    1. Hi Charles,

      Thanks for dropping by, I'm a big fan of the Guardian's technology coverage, and particularly enjoy your wisdom every week in Tech Weekly.

      I have to disagree about the lengths to which bloggers have to go to find the original link, particularly for us amateur bloggers. I have three very distinct levels of research whenever I am writing a post:

      1) I will always go out of my way to find primary sources for legislation, cases, reports, patents, and any other pertinent legal document (eg. complaints, consultations and treaties).

      2) Whenever I am citing a news source, I will usually link to “the last page I looked at before I began writing”, unless the news is about a legal document, in which case 1) applies. By the way, that usually is The Guardian.

      3) For terminology and general sources of information, Wikipedia and other online referencing websites will suffice.

      I would love to have the time to be more thorough, but for those of us who do this on our own time, this is rarely possible. In my case, I am a former academic turned consultant and fledgling entrepreneur. Blogging happens whenever I have the time for it, particularly because this blog does not produce any money and is completely a labour of love.

      As for the inventor, I did not mean to imply that he was running Lodsys, as far as I can tell, he is completely unrelated to the company, and the only connection is that Lodsys purchased some of his patents from another troll.

      Thanks about the MacroSolve thing, didn't know about it.

      And yes, I know you guys have written a lot about this, I am a daily reader.

  2. I think (and hope) that the last part of the post comes to reality. Wouldn´t that be a important lesson to media and patent lobbies to see the most innovative and skilled programmers/artist to stop being interested in closed, legalistic and suffocating legal regimes and preferred to come to country that have a more balanced approach on IP matters.

    It would be awesome 🙂

    But then again, I´m always labeled as an optimistic.

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