Patent Trolls' Next Target: Independent Developers

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.

[ Learn the lessons from mobile failure: RIM's, Microsoft's, and Nokia's "Innovator's Dilemma" moments. | iPhone, BlackBerry, or Android? Whatever handheld you use or manage, turn to InfoWorld for the latest developments. Subscribe to InfoWorld's Mobilize newsletter today. ]

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.

On May 13, many iOS developers reported receiving FedEx packages containing a threat that they risked patent-infringement lawsuits if they didn't pay Lodsys to license a patent covering in-app purchasing and other app-related matters. Here's what the company said on its blog:

There are lots of bills in life that it would be preferable to not pay if one didn't have to. Lodsys is just trying to get value for assets that it owns, just like each and every company selling products or services is, trying to do business and make a profit. It's odd that some of the companies that received notices had such a visceral reaction. Some of these companies have our favorite apps, for which we paid the asking price. We realize [sic] you have to get paid for your work and so do we.

Not only does the potential lawsuit threaten the developers, it threatens the mobile economy as a whole, which is dependent on the efforts of third-party developers, says Florian Mueller, a European activist who has pushed for software patent reform.

"Lodsys is trying to abuse the patent system in a way that could ultimately destroy the entire mobile apps economy, which is not only thriving on its own but has been and continues to be a key factor in making new mobile devices so useful and popular," Mueller wrote on his blog.

Apple was silent on the matter for more than a week, but on Monday Apple senior vice president and general counsel Bruce Sewell sent a letter to Lodsys telling it to back off. "Apple is undisputedly licensed to these patents and the Apple App Makers are protected by that license. There is no basis for Lodsys' infringement allegations against Apple's App Makers," he wrote.

Sewell's language makes it clear that he rejects the idea that the license agreements don't cover third parties. While he doesn't explicitly state that Apple will pay legal costs for the developers if it comes to an actual court fight, ISVs interviewed by our sister publication Macworld were pleased.

TLA Systems developer James Thomson, who broke the story when he received a letter from Lodsys, expressed a feeling of great relief: "I am extremely relieved that Apple has stood up for its developers against these patently unfair claims by Lodsys.

"I always believed they would, but it's a huge weight off my shoulders to see it written in black and white. The last 10 days have been some of the most stressful of my professional career, and I'd just like to say thanks to Apple and all our customers and friends who have been highly supportive of us during this time."

Other developers are less certain that Apple will really fight for them and have banded together in an effort to pool resources and stand up to Lodsys.

I hope Apple comes through. But the real issue here isn't Apple, or even Lodsys. It's a broken system that -- to use Matt Taibbi's memorable phrase -- is a vampire squid sucking the life out of innovation.

I welcome your comments, tips, and suggestions. Post them here so that all our readers can share them, or reach me at bill.snyder@sbcglobal.net. Follow me on Twitter at BSnyderSF.

This article, "Patent trolls' next target: Independent developers," was originally published by InfoWorld.com. Read more of Bill Snyder's Tech's Bottom Line blog and follow the latest technology business developments at InfoWorld.com. For the latest business technology news, follow InfoWorld.com on Twitter.

Subscribe to the Today in Tech Newsletter

Comments