May 26, 2011
It's bad enough when a company that has never invented much of anything buys a patent and then sues a giant like RIM or Microsoft for allegedly violating its intellectual property rights. But an obscure, Marshall, Texas, firm named Lodys is going after independent iOS developers, threatening to sue them if they don't start paying royalties for using Apple's in-app purchasing system.
For a while it looked like the developers were faced with the ugly dilemma of yielding to a bully or spending huge amounts of money to defend themselves in a handpicked federal court. But Apple this week intervened on the side of its developers, warning that it's "fully prepared" to defend its license rights.
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There's a word that describes companies like Lodsys, but I won't use it because I'd hate to involve myself or InfoWorld in a potential lawsuit over defamation. But we all know there are companies that buy patents and do nothing with them until they suddenly pop up with a claim that someone who is actually using related IP is violating their rights and had better pay.
Our patent system is enshrined in the Constitution and was designed to foster and protect innovation. But despite numerous, well-publicized examples of abuse, the system remains broken. I suspect Apple's intervention will scare off Lodsys. But this incident underlines the problem and is why anyone who works for a small company or hopes to strike out on their own as a developer has a stake in reform.
Picking on the little guy
Like a lot of patent issues, this one is complex and has roots in the pre-Internet days of the early 1990s, when a Massachusetts inventor named Daniel Abelow patented concepts that are central to the creation of an app store. (You can read the patent here.) In a recent interview with the Guardian, he said: "The idea was that if you're sitting and holding in your hand a product and you use it, why shouldn't it be aware of your behavior, digitally, and conduct your needs to the vendor, who could interact with you."
Hundreds of companies have licensed his patents, and four were purchased outright by Lodsys in 2004 and another by Webvention, also of Marshall, Texas, which calls itself "an intellectual-property licensing company."
The fact that both companies are based in Marshall is not a coincidence. The federal district court there is considered friendlier to patent predators than any other in the United States. It's so friendly, in fact, that plaintiffs will travel thousands of miles from their home to file a patent suit. It makes sense to base a patent holding company there if you think you might want to litigate.
The patents are related to technology now used (among other things) to convert free apps to paid ones with a button. Lodsys says that although Apple has licensed the technology, the license does not extend to third-party developers. It's worth nothing that the developers have no choice: They have to use related APIs if they want their apps to be accepted by Apple and sold via iTunes.
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