Apple Defends iOS Developers in Strongly-Worded Letter to Lodsys

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For the past week, iOS developers have been looking on in unease as a patent holding company called Lodsys, which has been accused of being a “patent troll” for its aggressive legal tactics, has targeted developers for the iPhone and iPad for allegedly infringing upon patents that it says cover the in-app purchases familiar to iOS app users.

Apple requires app developers who want to allow users to buy goods or services from within applications to offer in-app purchases as a payment option, thus activating Lodsys’ proverbial trap card — but Lodsys says that Apple, as well as Google and Microsoft, has already licensed the patent. Though this may be the case, it would not necessarily legitimate the patent: As Mike Masnick points out, “it’s almost entirely certain that all three companies got the license as a part of a blanket license from IV, and had no idea about this specific patent, nor took any interest in the details of this particular patent.”

Thus, Lodsys has managed to go after the little guys without directly provoking the big tech companies with the legal muscle to fight back. Lodsys has asked developers that use in-app purchases to pay it 0.575% of their total US revenue: This may not sound like an enormous amount, but 1) it’s not altogether clear that Lodsys is really entitled to this money to begin with and 2) developers fear that this could lead to a slippery slope of Lodsys or other “patent trolls” chipping away at their earnings with long-forgotten patent claims. Still, most small developers couldn’t afford the legal costs of going to war with Lodsys, even if they won a lawsuit, and at least one prominent app developer, Instapaper’s Marco Arment, has advocated that iOS devs should just give up and pay Lodsys, not because their claim is right, but because it’s not worth financial martyrdom to prove it wrong.

Though Arment wrote that “You can’t depend on Apple to step in. They probably won’t. Apple’s behavior toward developers has repeatedly shown that we’re on our own,” Apple has done just that this afternoon, writing a letter that defends iOS app developers against Lodsys’ claims. Though Apple seems to concede here that Lodsys’ patents are relevant, it makes the case that iOS developers are covered by the license, accuses Lodsys of showing “a fundamental misapprehension regarding Apple’s license and the way Apple’s products work,” and asks that Lodsys “withdraw your outstanding threats to the App Makers and cease and desist from any further threats to Apple’s customers and partners.”

Full text of the letter below: (via MacWorld)

May 23, 2011

Mark Small
Chief Executive Officer
Lodsys, LLC
[Address information removed]

Dear Mr. Small:

I write to you on behalf of Apple Inc. (“Apple”) regarding your recent notice letters to application developers (“App Makers”) alleging infringement of certain patents through the App Makers’ use of Apple products and services for the marketing, sale, and delivery of applications (or “Apps”). Apple is undisputedly licensed to these patent and the Apple App Makers are protected by that license. There is no basis for Lodsys’ infringement allegations against Apple’s App Makers. Apple intends to share this letter and the information set out herein with its App Makers and is fully prepared to defend Apple’s license rights.

Because I believe that your letters are based on a fundamental misapprehension regarding Apple’s license and the way Apple’s products work, I expect that the additional information set out below will be sufficient for you to withdraw your outstanding threats to the App Makers and cease and desist from any further threats to Apple’s customers and partners.

First, Apple is licensed to all four of the patents in the Lodsys portfolio. As Lodsys itself advertises on its website, “Apple is licensed for its nameplate products and services.” See http://www.lodsys.com/blog.html (emphasis in original). Under its license, Apple is entitled to offer these licensed products and services to its customers and business partners, who, in turn, have the right to use them.

Second, while we are not privy to all of Lodsys’s infringement contentions because you have chosen to send letters to Apple’s App Makers rather than to Apple itself, our understanding based on the letters we have reviewed is that Lodsys’s infringement allegations against Apple’s App Makers rest on Apple products and services covered by the license. These Apple products and services are offered by Apple to the App Makers to enable them to interact with the users of Apple products—such as the iPad, iPhone, iPod touch and the Apple iOS operating system—through the use or Apple’s App Store, Apple Software Development Kits, and Apple Application Program Interfaces (“APIs”) and Apple servers and other hardware.

The illustrative infringement theory articulated by Lodsys in the letters we have reviewed under Claim 1 of U.S. Patent No. 7,222,078 is based on App Makers’ use of such licensed Apple products and services. Claim 1 claims a user interface that allows two-way local interaction with the user and elicits user feedback. Under your reading of the claim as set out in your letters, the allegedly infringing acts require the use of Apple APIs to provide two-way communication, the transmission of an Apple ID and other services to permit access for the user to the App store, and the use of Apple’s hardware, iOS, and servers.

Claim 1 also claims a memory that stores the results of the user interaction and a communication element to carry those results to a central location. Once again, Apple provides, under the infringement theories set out in your letters, the physical memory in which user feedback is stored and, just as importantly, the APIs that allow transmission of that user feedback to and from the App Store, over an Apple server, using Apple hardware and software. Indeed, in the notice letters to App Makers that we have been privy to, Lodsys itself relies on screenshots of the App Store to purportedly meet this claim element.

Finally, claim 1 claims a component that manages the results from different users and collects those results at the central location. As above, in the notice letters we have seen, Lodsys uses screenshots that expressly identify the App Store as the entity that purportedly collects and manages the results of these user interactions at a central location.

Thus, the technology that is targeted in your notice letters is technology that Apple is expressly licensed under the Lodsys patents to offer to Apple’s App Makers. These licensed products and services enable Apple’s App Makers to communicate with end users through the use of Apple’s own licensed hardware, software, APIs, memory, servers, and interfaces, including Apple’s App Store. Because Apple is licensed under Lodsys’ patents to offer such technology to its App Makers, the App Makers are entitled to use this technology free from any infringement claims by Lodsys.

Through its threatened infringement claims against users of Apple’s licensed technology, Lodsys is invoking patent law to control the post-sale use of these licensed products and methods. Because Lodsys’s threats are based on the purchase or use of Apple products and services licensed under the Agreement, and because those Apple products and services, under the reading articulated in your letters, entirely or substantially embody each of Lodsys’s patents, Lodsys’s threatened claims are barred by the doctrines of patent exhaustion and first sale. As the Supreme Court has made clear, “[t]he authorized sale of an article that substantially embodies a patent exhausts the patent holder’s rights and prevents the patent holder from invoking patent law to control postsale use of the article.”Quanta Computer, Inc. v. LG Elecs., Inc., 553 U.S. 617 (2008).

Therefore, Apple requests that Lodsys immediately withdraw all notice letters sent to Apple App Makers and cease its false assertions that the App Makers’ use of licensed Apple products and services in any way constitute infringement of any Lodsys patent.

Very truly yours,

Bruce Sewell
Senior Vice President & General Counsel
Apple Inc.

(via MacWorld)


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