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Lodsys explains its legal threats: Apple is licensed, iOS developers are not

post #1 of 75
Thread Starter 
Following a number of legal threats that were sent by Lodsys to third-party iOS developers over in-app purchases on the iPhone App Store, the company has taken to its official blog to explain and justify its actions.

The answers were given on Sunday in a number of posts made to the company's official blog, in which the company revealed that Apple has not been sued because the company is licensed to offer in-app purchases. But Lodsys believes that developers do not have the right to offer in-app purchases through Apple's system without licensing as well.

"It is the owner of the hotel who is responsible for the overall service (value proposition) that guests pay for, not the owner of the land that the hotel may be leasing, not the travel agent that sold the reservation, not the manufacturer of tools such as hammers, nor the provider of materials such as nails or steel beams, which may be used in building the hotel; nor is it the outsourced linen washing service or the architect of the building who is responsible," the company said.

"Lodsys' patent portfolio is being used as part of an overall solution and we are seeking to be paid for the use of patent rights by the accountable party."

In addition to Apple, Lodsys explained that both Google and Microsoft are licensed for their "nameplate products and services." But the scope of those licenses, Lodsys believes, does not entitle any company to provide services to third-party developers.

"The value of the customer relationship is between the Application vendor of record and the paying customer, the OS (is acting as an enabler) and the retailers (are acting as a conduit to connect that value), and taking their % for that middleman role," the company stated.



The question-and-answer posts also reveal that Lodsys is seeking 0.575 percent of U.S. revenue over the period of the notice letter to the expiration of the patent, plus applicable usage. That would amount to $5,750 per year for an application that makes $1 million in annual sales.

Last week, developers began receiving letters from Lodsys, and were accused of patent infringement. The letters gave developers 21 days to license technology related to in-app purchases, a feature that Apple offers iOS developers through its App Store.

Lodsys has accused developers of infringing on U.S. Patent No. 7222078, entitled "Methods and Systems for Gathering Information from Units of a Commodity Across a Network." The original patent was filed in December 2003, but dates back through continuations to earlier applications as old as 1992, and is credited to Dan Abelow.

Intellectual Ventures bought Abelow's patent portfolio in 2004, and later sold them to a private rights ownership group, which set up independent companies. Lodsys said that neither Abelow nor Intellectual ventures are involved in the licensing activities.

"Dan does have a consulting agreement to work with Lodsys on matters pertaining to the Lodsys patents," they said. "This agreement is for a fixed fee, and if that fee is exceeded, then he is paid a consulting day rate. Dan has no direct economic interests in the patent licensing activity."

Apple debuted its in-app purchasing system in 2009 as part of iOS 3.0 for the iPhone. Though the feature was initially restricted to pay software, later that year Apple granted creators of free applications the ability to charge for add-ons and additional content.

Just like purchases made directly through the App Store, in-app purchases are charged by Apple to a user's iTunes account. Apple takes a 30 percent cut of all transactions made for software on iOS devices.
post #2 of 75
Hmm...
post #3 of 75
Wait what? They license their nonsense to Apple? Is that what they're claiming here? I can't tell through all the terrible analogies.
post #4 of 75
Quote:
Originally Posted by franktinsley View Post

Wait what? They license their nonsense to Apple? Is that what they're claiming here? I can't tell through all the terrible analogies.

Yep that is what they are claiming. So lets see the paperwork, it is possible that that licensing actually does give Apple the right for developers to use the tech without also paying. After all that is why Apple would want it so why wouldn't they make sure it was included.

A non tech's thoughts on Apple stuff 

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A non tech's thoughts on Apple stuff 

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post #5 of 75
So they license this patent to Apple to offer as a service, and want to be reimbursed by the people who use the service too? Wouldn't that be double-dipping, something in this context, to my knowledge, is quite illegal?
post #6 of 75
Greedy patent troll.
It's greedy worthless companies like this ruin it for everyone else. The comparison they offer is terrible, it makes no sense in the software world.

I doubt Apple will let this happen and am surprised they have no stepped in, yet. There is no way they'd risk losing their developer base over greed like this, especially with Lodsys having the ability to target (most) ANYONE who develops for iOS, small time or major player.
post #7 of 75
Patent system has major flaw...

Patent should be reserve to real product and manufacturing process only. Shouldn't be able to patent theoretical and wishful thinking like majority of pseudo software patent and gene patent.

I should summit this patent: Method to interact with an electronic device via key or tactile input peripheral. And sue every tech company in this world..
post #8 of 75
I should have been a patent attorney.
post #9 of 75
Here's another analogy...

I'm a software developer, I make a piece of software. I can install the software on applicable devices - stick it on, hey presto it works.

So, I want to distribute my app and maybe make some money (always useful), so I decide which platforms I want it to work on, i think that iOS is popular - quick look see. Ah yes, I like this in-app purchase system they're offering, I'll use that.

software developer = developer
apple = publisher.
App store = medium

Apple has license for technology used on their App store.

Really simple, oh no that isn't an analogy at all is it?

Oh we want an analogy - it'd be a bit like making musicians pay a license to have their music on cds.
post #10 of 75
I think this company's got no chance .... its developers using Apples developed and produced solution (API's) for IAP ... dev's cannot use their own home-brewed solution on iOS AppStore .... therefore surely dev's are basically using the code Apple has licensed

Seems like another troll will troll case
post #11 of 75
Quote:
Originally Posted by driver8 View Post

I should have been a patent attorney.

Why would you want to be an ***hole? Oh, sorry, you said patent attorney, not patent troll.
post #12 of 75
I don't get it. If the patent is close to 20 years old now, it has expired. Patents are currently valid for 20 years, but if issued before 1995 they are only valid for 17 years...

“Utility and plant patents issued prior to June 8, 1995 expire 17 years from the date of issue with the payment of maintenance fees. …Patents are not renewable. Under special circumstances, a patent term may be extended.” Does a patent last forever? (Georgia Tech Library and Information Center, “Patent Facts,” Georgia Institute of Technology, Atlanta, Georgia, June 18, 2008)
post #13 of 75
Land? Let's fix the analogy...

I have a hotel and buy a certain sliding glass door, and it turns out that the company that makes the door DID license the sliding door technology, but Lodsys decides they really only meant that the door company can run the door to test it at the factory and that every hotel that uses the sliding doors now is infringing and should be sued.

OK, that's a bit closer. So... does it work that way in real life or not? Would someone sue every customer that bought a car if they felt that the manufacturer didn't license something correctly, or would they sue the manufacturer? I mean, I can be using that car as a taxi and making money... so am _I_ getting sued because the far meter that's installed violates a patent? I'm guessing no, but I'm not an attorney. Or troll.
post #14 of 75
Just ignore the trolls like that, no way it can go through, would be interesting to see them being crushed with Apple's hammer, just waiting for the countdown.
post #15 of 75
Apple will have to fix this fast, since it renders their IAP system useless for developers.
post #16 of 75
Software and gene patents are bs.

Just wish China and India would give the US the middle finger and blatantly disregard all these patents.

If you can't make a physical product out of your ideas it should not be patentable. We all pay the costs for these patent trolls' greed.
post #17 of 75
Quote:
Originally Posted by synagence View Post

I think this company's got no chance .... its developers using Apples developed and produced solution (API's) for IAP ... dev's cannot use their own home-brewed solution on iOS AppStore .... therefore surely dev's are basically using the code Apple has licensed

Seems like another troll will troll case

Exactly. It's a troll case and I look forward to Apple fighting this suit to protect their developers. That's why everything goes through the Apple App Store and there is an API.
post #18 of 75
Quote:
Originally Posted by tasslehawf View Post

Apple will have to fix this fast, since it renders their IAP system useless for developers.

It doesn't make it useless, but it does add at minimum one half a percent of their revenue as a cost of doing business, as well as open the door for other patent trolls to try and take advantage of developer's with little profit from mobile apps. Agree with some others that Apple should step in here.

FWIW. I'm very curious if Apple is paying continuing/one-time license fees to Lodsys regarding this patent claim as the article hints at.
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post #19 of 75
I think Lodsys may wake a sleeping giant if they keep harassing the villagers. I won’t be surprised if Lodsys quietly drops this for no apparent reason.
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post #20 of 75
Quote:
Originally Posted by mrstep View Post

Land? Let's fix the analogy...

I have a hotel and buy a certain sliding glass door, and it turns out that the company that makes the door DID license the sliding door technology, but Lodsys decides they really only meant that the door company can run the door to test it at the factory and that every hotel that uses the sliding doors now is infringing and should be sued.

OK, that's a bit closer. So... does it work that way in real life or not? Would someone sue every customer that bought a car if they felt that the manufacturer didn't license something correctly, or would they sue the manufacturer? I mean, I can be using that car as a taxi and making money... so am _I_ getting sued because the far meter that's installed violates a patent? I'm guessing no, but I'm not an attorney. Or troll.

Good argument and nice perspective. This reinforces my feeling that Apple will be running point on this to protect their developers to protect their platform to protect their HW to protect their sales to protect their profits.
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post #21 of 75
So, Lodsys is only interested in going after the app developers - well I guess they realise that they are easy game and don't have the benefit of Apple's legal team.

As mentioned by others, this whole notion of dreaming up patents for ideas is a nonsense! Anyone sitting there and thinking 'I'll add an update button' has only a limited number of ways of translating that into a function. Not only that but we have got used to the concept of a standardised UI so when we look for an update button it should be fairly obvious. Why should I/we have to pay someone for this?

The sooner legislation is brought in to eradicate these trolls the better. The only people gaining from these activities are the lawyers while everyone else is being screwed!
post #22 of 75
This is just silly as the in-app purchasing is Apple software that the app maker is using. They aren't writing in-app purchasing software. This would mean that if someone built a website using flash, they'd be responsible for having licenses for any patented technologies Adobe has licenses for?
post #23 of 75
Quote:
Originally Posted by BigMac2 View Post

Patent system has major flaw...

Patent should be reserve to real product and manufacturing process only. Shouldn't be able to patent theoretical and wishful thinking like majority of pseudo software patent and gene patent.

I should summit this patent: Method to interact with an electronic device via key or tactile input peripheral. And sue every tech company in this world..

I think Patents are useless unless you are going to use them and develop a actual product. Some company can patent a special button that opens a pop-up with special information in it.

Technology Patents should expire like domains. Every year you have to renew your patent and pay good money to do so. That way you can determine that this Patent is not a fictional product or item.
post #24 of 75
Quote:
Originally Posted by grobelaar View Post

Here's another analogy...
Oh we want an analogy - it'd be a bit like making musicians pay a license to have their music on cds.

Actually, it would be like Wurlitzer selling a piano to a concert hall, then requiring any musician who uses it to pay them as well.
post #25 of 75
Quote:
Originally Posted by sichy View Post

Just ignore the trolls like that, no way it can go through, would be interesting to see them being crushed with Apple's hammer, just waiting for the countdown.

The problem is that it doesn't matter if its defensible or not.
The small devs are still required to respond, which means time and money, no matter how seemingly trivial. For a one-person shop, this kind of thing can be a business killer.
Apple really does need to step up and offer a blanket defense fund or resource for their developers.
post #26 of 75
Apple:

"Sorry its taken 2 months to approve your app but you app but it is infringing on 20 Patents what would you like to do?"

A: Licence Patent and pay more money.
B: Redesign Your App.
C: Back to the drawing board.
D: Take Legal Action.
post #27 of 75
I think the fact that Apple has already licensed it and given it as part of their framework to the devs protects the devs. LIke the company said, they believe that the license doesn't extend to the devs. Sounds like to me they are hoping someone will bite and set precedence.
post #28 of 75
Quote:
Originally Posted by charlituna View Post

Yep that is what they are claiming. So lets see the paperwork, it is possible that that licensing actually does give Apple the right for developers to use the tech without also paying. After all that is why Apple would want it so why wouldn't they make sure it was included.

It is also possible Apple has licensed this for the own in-App purchase like iTune and App Store (TM) but not for developers use. We'll have to wait as see the paperwork.
post #29 of 75
I don't believe them that this is not about pressuring Apple. Surely they do not want to administer thousands of little agreements, some only worth a few dollars each? They are aiming at getting Apple to automatically license it for you when you turn on in-app purchasing, and to automatically forward the 0.5% to Lodsys.
post #30 of 75
In other words they are trying to double dip. They could get in trouble doing this. Apple may decide to withhold their licensing fee in response. In fact it sounds like they gave Apple the arguement that this patent doesn't apply to them. They are the landowner/maker of the tools.
post #31 of 75
Is there any official comment from Apple?
post #32 of 75
This problem is a perception issue. If developers BELIEVE that they will be sued if they use IAP then it will either stop using IAP (which is a revenue stream for Apple) or stop developing on the platform all together. And it could stop new developers from starting iOS development.
post #33 of 75
I presume someone has patented the patent-troll process? Can't we use them to bring all the other patent trolls down.

I don't think this is double-dipping, as Apple themselves do 'In-App' purchases (and have done for some time).

On the other hand, there's something fishy here. Either Apple's lawyers did a really bad job on the contract, or Lodsys don't have a leg to stand on or Apple have been remiss in disclosing the (small) additional costs to developers.

Given the percentages involved, I would think Apple would simply have swallowed it as part of their 30% - i.e. the way they do with the card processing fees, currency conversion, etc. Which makes me think that Lodsys may be trying it on.
post #34 of 75
Quote:
Originally Posted by cylack View Post

Software and gene patents are bs.

Just wish China and India would give the US the middle finger and blatantly disregard all these patents.

If you can't make a physical product out of your ideas it should not be patentable. We all pay the costs for these patent trolls' greed.

I think that's a bit harsh on software developers to be honest. Why should I, as a hardware guy, be able to protect my efforts to create something, but a software engineer shouldn't.

What I have a problem with is the patenting of ideas, without any product of any kind behind them. If the only thing you have to sell is a license, then I'm not sure that should be patentable, but if you have either something physical, or some code to sell, that's a different matter.

Not sure which one of those two this company falls into.
post #35 of 75
This seems unfair but it really depends on what Apple has licensed. The fact Apple, Google and Microsoft have all paid for a license suggests its a legit patent that isn't with challenging.

If Apple bought a license for themselves rather than for anything running on a device they produce then this company would be right. Just because a developers software runs on an iPhone and is distributed by Apple, there isn't anything between the dev and Apple which means the dev can use apples licenses. What's bad is Apple have potentially urged devs to use something that they new they could be sued over. A statement from Apple is long overdue on this one now.
post #36 of 75
I wonder if the real target of Lodsys is Apple. By making things impossible for developers, and therefore untenable for Apple, Lodsys hopes Apple will step in and bail out developers by:

1) renegotiating their own license to a higher rate to include developers

or

2) paying the licensing fee for the developers
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post #37 of 75
Quote:
Originally Posted by felixdabid View Post

Is there any official comment from Apple?

No, and there shouldn't be. Apple should address this problem through the proper channels not the media. When Apple puts out a press release I expect it to say the problem is resolved and not much else.
post #38 of 75
Quote:
Originally Posted by Beauty of Bath View Post

No, and there shouldn't be. Apple should address this problem through the proper channels not the media. When Apple puts out a press release I expect it to say the problem is resolved and not much else.

Considering developers get a large majority of their information about Apple from the media, this is something that should be addressed publicly. Without any sort of acknowledgement, as far as we know, we are at risk.

Edit: Just to clarify, I know Apple has direct links to developers, but those are limited and nothing on this issue has been addressed - I'm talking more for behind the scene issues that are brought up by the media, like this.
post #39 of 75
Quote:
Originally Posted by solipsism View Post

I think Lodsys may wake a sleeping giant if they keep harassing the villagers. I won’t be surprised if Lodsys quietly drops this for no apparent reason.

Are you suggesting Apple will make them an un'offerta che non possono rifiutare.
post #40 of 75
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