Lodsys patent claim threatens independent developers, what next?

On his blog he states, "...companies like Apple will look at these issues on a case-by-case basis and make a determination in each case how far they go with their support." As Macworld pointed out early on, Section 6.2 of the iOS Paid Apps Agreement seems to put the liability for any infringement back on app developers. But that's unlikely to happen. Still, it's a sticky situation that (once again) turns our attention to some ugly truths about our courts and our patent system.

The patent in question, according to Cnet, appears to be patent number 7,222,078, an invention of Dan Abelow. Abelow is a successful inventor and in his resume he notes that his communication and customization patents are licensed and owned by Lodsys, LLC. I'm not a lawyer, but Mueller points out that the patent is broad, covering "methods and systems for gathering information from units of a commodity across a network" and in today's case (along with a previous infringement threat to Computer Logic X) is being applied to the "upgrade" button used to transition free iOS apps to their paid equivalents; it could possibly apply more broadly against the mechanism for in-app purchasing. Again, I'm no lawyer, but I'm not so sure it's that the patent is too broad, but that it is being very loosely applied here.

The patent application itself sounds rather wonderful -- the aim, no doubt as originally envisioned by Mr. Abelow, is to create a mechanism whereby users of information devices can give feedback directly to manufacturers, allowing them to constantly improve their products. A sort of "learning system" of commerce. Naturally, one could see how in-app purchases could fit this loose definition. "I wish my camera app had a tilt-shift lens," a customer may lament, only to be provided with the opportunity to install one via download (or upgrade to a full version).

The problem I see is that this patent expressly notes again and again that customers would explicitly state their needs to the creator of the product, giving specific feedback, only to have that creator deliver the enhancement. There's much ado about the "learning" and "feedback" from customers. Granted, the patent is primarily focused on the mechanism (which the App Store itself somewhat resembles), but I don't think Mr. Abelow would have envisioned product augmentation being available to customers as a violation of this -- unless there was a direct channel to developers using this system.

If the patent is general enough to cover all cases of "I asked for something from the vendor, and then I got it," wouldn't all customizable e-commerce solutions be subject to it? Then again, given the fact that developers do provide a means of feedback via the App Store or in their apps, then providing enhancements based on requests is enough to violate this patent -- however that would presumably also extend to sending requests to developers via US Mail, telegram, semaphore or smoke signals.

Ultimately, the extent of the patent's applicability will be decided by lawyers. In the end, I think this could be a litmus test, a watershed moment for our antiquated patent system which relies on lengthy descriptions for specificity rather than true innovation and distinction from prior art in substantial ways.

A brief diversion: When I started blogging at Weblogs, Inc. I began over at Download Squad. I remember clenching my teeth every time SCO came up, as they seemed determined to knock the UNIX underpinnings out from under Linux by attacking IBM's patent portfolio. It irked me then, and patent trolling has only gotten worse since those days not too long ago. At least SCO battled with a major corporation.

But there is an entire industry where companies like Intellectual Ventures, Webvention, LLC and others make money by holding and enforcing patent portfolios. They are allowed to do what they do simply because our system allows it to happen -- and East Texas is somewhat the epicenter of these actions. Webvention is no doubt located there for that reason.

In my opinion, this aggressive patent enforcement is not always good for innovation. Edible Apple suggests that Intellectual Ventures is implicated in all this, but I can say with confidence that the company isn't involved. While IV might have held these patents for a while, the way all this mess works is that they buy and sell patents like horse traders in the 1700's. IV may have brokered a deal with Webventions or Lodsys long ago, but today's actions aren't directed by them.

Rather, this smells more like a low-rent play by Lodsys. Edible Apple's post suggests guilt by association -- numerous Intellection Ventures staff are former Microsoft folks, apparently. The story also gets the date of the previous action against major printer makers by Lodsys (their ONLY other legal action, incidentally) wrong, stating it was 2009. In fact, Lodsys filed in February, 2011 against HP, Lexmark, Samsung and others. The action there is reminiscent of today's wackiness (where the infringment was around customer feedback), furthering the case that a more sophisticated company like IV isn't behind it, but a more naive company like Lodsys is shooting in the dark, hoping for a payout. I'm aware IV has frequently set up shell companies to mask its involvement in patent claims, but I also have it on good authority that Lodsys is not one of them.

In my opinion, this is not only patent trolling by Lodsys, but the worst kind of cowardice on their lawyers' behalf. You see, by going after independent developers who can't afford proper legal protection, they are simply trying to provoke Apple into action without actually attacking Apple (and spending the millions it would take to fight them in court). Also, Lodsys is smart enough to game our system. As Wired points out, Lodsys is based in East Texas, and patent attorneys know that Marshall, TX is very friendly to patent holders. Then again, Judge Leonard Davis overturned the $625 million judgement against Apple in the case brought against them by Mirror Worlds. The judge felt Mirror Worlds didn't provide enough evidence and overturned the jury award but denied Apple another trial.

Still, Mueller notes the fact that big companies can swat these annoyances with legal firms on retainer, an avenue that isn't available to most iOS devs. Even medium-sized developers like those behind Pocket God cannot afford the fees without a serious drain on their bottom line.

I agree with Mueller and others who suspect that Apple may offer some assistance to developers. The company has to be careful, however, or the gesture of help could open Apple up to constantly writing checks (something I'm sure the legal team thought about when they wrote up Section 6.2). Yet Apple has a ton of money in the bank, wields a mighty legal hammer, and the last thing it wants to do is stifle innovation and growth on the App Store. We may never know what Apple does, but if, a year from now, no court proceeding has happened and in-app purchases still exist, we'll know something went down beyond the ability of developers to self-remediate.

In the end we're likely years aware from proper patent law reform. With the onus on the "little guy" there's very little impetus for big companies to rock the boat when they are also guilty of filling dozens of protective patents in a war of ideas to protect their own innovations. Not great for independent developers or inventors, but that's where the vested power is -- in the hands of the biggest companies on the planet.

We reached out to Lodsys (like everyone else) and got no reply, like everyone else. Developers aren't talking either, although most have stated they have spoken to Apple. Thankfully, James Thomson decided to damn the torpedoes and has released both the full version and lite version of his app, PCalc 2.4. In due time I'm sure Apple will do something. But what?

Source: http://www.tuaw.com/2011/05/13/lodsys-patent-claim-threatens-independent-developers-what-next/

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