Lodsys vs. Apple Devs: EFF helps us dig deeper

The developers targeted by Lodsys's patent infringement accusations last week have been in a sleepless holding pattern, awaiting response from Apple before making their next moves. Electronic Frontier Foundation (EFF) staff attorney Julie Samuels says that Apple legal is likely hard at work reviewing the patent in question, however, and should be in touch soon. Though it's very unlikely that Cupertino won't offer assistance, devs will also be able to turn to EFF for advice, where they may even be paired with pro bono patent attorneys. Besides offering this bit of good news, Samuels was able to help us dig deeper into Lodsys, and the dirty business of patent suits. To get some perspective, we reached out to Lodsys CEO Mark Small and EFF (which tends to side with developers). We have yet to hear back from Mr. Small, but EFF was kind enough to give us its take on the situation. Click through for the full rundown.

The Origin of U.S. Patent 7,222,078

"Even if the potential plaintiff's claim or patent is not a good one, it will still cost tens of thousands of dollars to go to court to prove that it's a baseless case." - EFF

We've only been able to confirm a few details here, because of the mysterious nature of patents and shell corporations. U.S. patent 7,222,078 was born on December 10, 2003, when an application was filed by inventor Daniel Abelow. He owns a Florida-based consulting firm called Breakthrough Usability, Inc., and his patents are currently owned by Webvention, LLC, according to his website. He's the last individual that we're able to trace this patent to. Based on U.S. patent documents, a Las Vegas-based company called Ferrara Ethereal, LLC currently holds the patent. And, as we already know, Lodsys, LLC -- a third party that doesn't appear on the patent -- is pursuing the infringement in this case. Each LLC (Limited Liability Company) is incredibly easy to create, and Lodsys clearly threw its website together overnight (the domain was registered in 2009, using a bogus address and telephone number), so it's not yet clear who attorneys are reporting to. These companies fit the patent troll mold, however, meaning that they own patents and license them, rather than use them for research or to make a product. (Because "patent troll" is a pejorative term subject to interpretation, we'll refer to these as "non-practicing entities," instead.)

Apple's Patent License

According to a post on the Lodsys blog, "Apple is licensed for its nameplate products and services." So is Google, and Microsoft, the firm claims. Apple's decision to license the patent should not be viewed as any indication that the patent is applicable in this case, however. Rather, the company may have decided to license the patent simply because it was cheaper to pay a fee than to run the risks of litigation, as is often true with intellectual property (IP) cases. It's also possible that Apple licensed the patent for another product, unrelated to iOS. Samuels expects Apple to offer its full support to developers targeted by Lodsys, perhaps even extending its license to cover them.

EFF's Julie Samuels explains:

The fact that Google and Microsoft and Apple have taken licenses on this already doesn't say that the patent is a great patent, but it does show that at some point Apple decided it was more financially beneficial to take the license than to litigate. Because Apple has already made that value judgement before, they might make it again.

What Lodsys Wants

"Lodsys isn't helping society out by adding inventions, instead they're creating a tax impeding further innovation." - EFF

Though it's obvious that potential licensing fees are motivating Lodsys, it's not clear why the firm is targeting individual developers. Fees of 0.575 percent would add up if paid by a handful of developers, but even then, they hardly seem worth the hassle and expense for Lodsys, not to mention all the bad publicity. For example, if developers bring in $100,000 in annual gross revenue from an affected app (and based on what we've heard from devs, even this figure is inflated), Lodsys would collect $575 per year, per app, assuming these developers continue to offer in-app upgrades (and those that do, also elect to purchase a license from Lodsys). It's also possible that Lodsys already reached out to Apple, asking the company to extend its license to cover third-party developers, in which case Lodsys may simply be using the letters sent last week to pressure Cupertino into signing an agreement. While purely speculative, that plan could easily backfire, however. "Apple might litigate because they want to show developers that they have their back," Samuels said.

Apples and Oranges

EFF sees intellectual property cases on a daily basis, though it recognizes that elements of this case in particular are unique. Cases like this don't often receive this level of attention, especially when they don't go to trial (and patent cases very rarely do go to trial). Additionally, it's rare for a plaintiff to defend its actions publicly, but Apple's involvement has made this front page news, pressuring Lodsys to reach out through its blog. It's also very unusual that Apple's licensing agreement doesn't cover third-party developers, Samuels said. Since Apple provides the framework (and takes a 30 percent cut of profits), iOS developers should feel safe using the dev tools without being concerned about infringing patents that haven't been licensed. Unfortunately, that doesn't mean they wouldn't be held accountable if an infringement case went to trial. Because it needs to provide a safe development environment, however, it sure seems like Apple should take the lead on a defense or licensing solution, or risk losing its devs.

Wrap-Up

Though we may never know exactly what motivated Lodsys to target individual developers, we hope that Apple offers to lend a hand, providing assurance that future cases will be handled swiftly and directly. This action would leave developers with the resources necessary to continue innovating, rather than wasting their time worrying about infringement accusations from non-practicing entities. Apple's framework was provided by Apple, and while the company may not be legally responsible for protecting developers, those relationships are critical to maintaining -- and continuing to grow -- a healthy, solid infrastructure.

P.S. We just received word that Iconfactory (Twitterific) received a letter from Lodsys today.

Update: A reader directed us to the Patent Assignment Abstract of Title, which clearly lists Lodsys as the assignee, as of September 2, 2010. Curiously, the contact remains the same as when Webvention held the patent, and both companies are listed in Marshall, TX -- just 0.7 miles apart.

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