Apple to Lodsys: you'll have to go through us to sue iOS devs
arstechnica.com
arstechnica.com
1. Under Rule 24(a)(2) of the Federal Rules of Civil Procedure, the court must grant Apple the right to intervene as of right if Apple can show: (1) that it has filed a timely motion to do so; (2) that it claims an "interest" in "property" that is the subject of the action; (3) that its ability to protect its interest in that property may as a practical matter be impaired or impeded if the legal action is allowed to be disposed of without its participation; and (4) that existing parties cannot adequately represent that interest.
2. Consistent with this rule, Apple's legal argument boils down to the idea that it has a license from IV to protect, and rights under that license, all of which will be impaired or impeded if Lodsys is allowed to pursue infringement claims against developers who develop apps for the environment to which Apple's license applies. Hence, Apple must be allowed to step in to defend the integrity of its license and to argue, based on that license, that Lodsys is barred by the doctrine of "patent exhaustion" from pursuing claims against the developers.
3. Apple thus argues that it needs to be in the case to protect its own interests, not those of the developers. Now, de facto, this might amount to the same thing since Apple does not want to face a revolt among its developers. But there is irony here in that Lodsys is arguing, as one of its major points on why Apple should not be allowed to intervene, that Apple has no obligation legally to hold the developers harmless (i.e., based on Apple's agreements, the developers are on their own). In seeking to intervene to argue the patent exhaustion doctrine, then, Apple is saying it will protect its license rights primarily and developers only incidentally and, again, without undertaking any legal obligation to indemnify any developer.
4. All that said, "patent exhaustion" is a potent defense, the effect of which (if upheld) would be invalidate the patent for misuse. "Misuse" here lies in the idea of extending the exclusive rights afforded by the patent grant beyond their legitimate scope. Apple's ability to prove misuse, though, is by no means easy. To show misuse, it will essentially have to show that the IV license was intended to cover separate products (apps) that did not even exist when the license was granted and that do not constitute an integral part of the Apple product when sold. This will be tricky at best and obviously will take a party of Apple's sophistication and wherewithal to marshal the arguments and factual development effectively. That, of course, is why Lodsys does not want Apple in the case. It would much prefer to bully smaller and less sophisticated parties because that is how patent bullying works best.
1. Motion to intervene: the fact that Apple earns revenues from third-party developer sales confirms that its interest in the "property" at issue in the litigation (the IV license) is potentially impaired if Lodsys is allowed to sue the developers for infringement when in fact (as Apple would claim) its patent rights were "exhausted" in this area when it (or its predecessor) granted the license to Apple. This fact, then, strengthens Apple's claim that is has a right to intervene to protect its interests.
2. On the merits: Apple will claim an unimpaired right to earn revenues from its developers owing to the strength of its license - this bolsters its substantive case that Lodsys is abusing its patent by trying to double-dip in having taken payment for the license in the first place (from Lodsys's predecessor) and then over-reaching to try to get further licensing revenues from those who should have the right to rely on Apple's license.
Lodsys acquired its four patents from former Microsoft CTO Nathan Myhrvold's Intellectual Ventures patent holding company. It turns out that Apple already has a license to those patents by virtue of an investment deal in Intellectual Ventures.
"Even if Apple believes the patents wouldn't stand up to reexamination, it is suspected that the secret terms of the license agreement with Intellectual Ventures prohibits Apple from attempting to have the patents invalidated."
1) Apple tries to shield the iOS developers using its previous licensing agreement.
2) Someone else tries to get the patents invalidated. Several companies whose clients were targeted by Lodsys have filed preemptive lawsuits requesting declaratory judgements that Lodsys' patents are invalid, and some independent developers led by former Apple engineer Mike Lee have formed a legal defense fund to fight Lodsys and other patent trolls. Even if Apple believes the patents wouldn't stand up to reexamination, it is suspected that the secret terms of the license agreement with Intellectual Ventures prohibits Apple from attempting to have the patents invalidated.
It might be expensive, and maybe even get abused, but the positive PR it would generate and the goodwill it would build up among third-party developers would far exceed the $2B spent (if it even gets spent) on behalf of said developers.
That would be a first and be very interesting.
Having a defense fund would force Lodsys to actually do more than put up a front and go and sue each licensee... this becomes much much more costly either in time (serial cases) or money (parallel cases).
If both Lodsys and Apple go head to head in the courts, then it really comes down to a game of attrition. Who has the most cash to pay the attorneys. Even if Lodsys is run by attorneys, and the principals work free, they still have to pay everyone else.
Lodsys can't outpay Apple. They just don't have the cash. So it should be a deterrent.
The problem is the concept of software patents in general, not the various ways of "enforcing" them.
From Wiktionary:
abuse: (n.) Improper treatment or usage; application to a wrong or bad purpose; misuse; perversion.
In my understanding, the intended purpose of the patent system is to protect and foster innovation. Clearly, the patent system is being misused for a very different purpose, which many would call bad or wrong. As such, this perversion of the patent system qualifies as abuse to those who agree.
The patent system itself being "the problem", as you say, in no way makes this abuse of it less of a problem.
If you don't believe that this is abuse, it might be because of your second statement:
> They patented something and are suing people they think are infringing on their patents.
Lodsys did not patent this. At best, Intellectual Ventures patented it, and Lodsys "bought" the patents, probably through some more nefarious means, with the sole intent of profiting through litigation. No innovation there.
I see this on some level, but on some other level, it makes sense to be able to transfer property. You invented something. The government gave you exclusive rights to sue anyone who did anything remotely resembling what you invented. You decided the best way to profit from your invention was to sell this right to someone else.
Clearly, this is fine. The problem is not that you cashed out on your work. The problem is that the government shouldn't have given you the right to sue other people for doing something similar to what you do.
We can't blame Lodsys for exploiting the holes in the patent system. For that, we have to blame the system itself.
The right way to monetize innovative software-related ideas is to write innovative software, which is protected by copyright. But the law says differently -- just coming up with an idea is more valuable than coming up with a product that uses that idea to be innovative. And there's your problem.
Yes, we can. We can blame Lodsys, IV, et. al. for behaving legally but unethically and/or counterproductively to society, while also blaming the system itself.
Otherwise, this statement is roughly similar to saying that you can't blame bullies for beating up nerds; it's the nerds' fault for being weak, and the playground's fault for not having nerd protection.
> We can't blame Lodsys for exploiting the holes in
> the patent system. For that, we have to blame the
> system itself.
> So long as something is legal, it is moral.
> We can't blame that serial murder just because
> he found a way to kill people that is perfectly
> legal!Devil's advocate: Whoever first thought of the tech behind these patents (i.e the people who filed them) may have been motivated by the expectation that even if they cannot figure out a way to directly profit from their ingenuity (by licensing to developers, for example) a patent is valuable because it can be sold to companies who can better manage their use and licensing, part of which may require litigation in order to enforce the rights bestowed by the patent.
In other words, making patents more fungible makes patenting more attractive to innovators.
Apple didn't patent it either, "bought" a license, and sought to profit from that license. There is no more innovation there than with Lodsys.
This isn't about who innovated what. You're watching a protection racket in action.
Absolutely not. The concept of patents, as applied to software or anything else, is a valuable aid to innovation. The implementation of that concept is what is flawed.
What has made it a thorn in the side of the software industry in the abuse of companies big & small, legitimate (Amazon's single click checkout) or illegitimate (Lodsys). Without abuse of the system, it's a great thing. Problem is we don't live in a perfect world and there is such a massive gray area, which makes it a very difficult problem to solve.
> They patented something....
False. They established a shell company in TX and bought 4 patents off the biggest patent troll company out there with the sole intent of suing whoever they could.
But, let's not forget there is a lot for Apple to lose in this if Lodsys is victorious. If developing iOS apps becomes a patent minefield, AAPL stands to lose a lot of money.
Anyone know why Google/MS/RIM haven't filed to intervene as well?
Edit:
List of investors: http://www.patentlyo.com/patent/2011/05/intellectual-venture...
RIM: http://www.intellectualventures.com/newsroom/pressreleases/1...
Perhaps because, in terms of dollars spent by users, the iOS market is by far the biggest ongoing concern.
I'm sure that, for RIM at least, the cost-benefit analysis is pretty prohibitive.
Not necessarily. There are limitations on patents that prevent you as a patent holder from successfully suing the customers who buy widgets from me for patent infringement if I have a valid license for that patent from you.
In this case, since the Intellectual Ventures ("Lodsys") patents cover both client and server mechanisms, and Apple owns and makes the server side processes, and Apple has a valid license, the argument is that the same principle applies.
The company asserts that developers are its business partners, and therefore Apple has a material interest in protecting those partners from being sued over technology that it has previously licensed. The heart of the dispute hinges on the licensing terms Apple received from Intellectual Ventures, though the details of those terms apparently cannot be publicly revealed.
Apple believes the licence it has protects its partners. Without seeing the terms of the licence it is impossible to say if this is the case, but it is certainly possible.
And it certainly seems silly that Apple would not have sought those terms in its license. Of course, patent licenses don't often appeal to common sense, but the one thing Apple has is foresight.
Apple needs this. Else it will potentially lose its 30% cut off all in-app purchases.